United States Steel Corporation (NYSE: X) revisited

Shares of United States Steel Corporation (NYSE: X) have been on a wild ride for more than a year now, with outgoing President Joe Biden making a blocked takeover by Japan’s Nippon Steel one of the final acts of his administration. The $15 billion saga is far from over, however, and one executive is appealing directly to incoming President Donald Trump for a rescue.
“The president can step in now and undo the wrongful, shameful, corrupt actions of Biden,” US Steel CEO David Burritt told CNBC, suggesting that Trump “has the opportunity to have fresh eyes and do what’s right.”
Trump opposed the deal in the run-up to a contentious election last November, saying the Pittsburgh-based company should remain American-owned, but it’s no secret he doesn’t see eye-to-eye with Biden on most things. An about-face—especially if US Steel continues making threats to close plants in Pennsylvania if the Nippon transaction falls through—would be an easy way to further reverse key aspects of Biden’s legacy, just like Trump has promised to do with a controversial offshore oil drilling ban.
‘Fabulous deal’
“This is a fabulous deal,” Burritt continued. “Can you imagine somebody investing in the United States, billions of dollars, and then above the basic labor agreement, billions of dollars more to make this company fantastic.” That sounds like language designed exactly to appeal to Trump, especially as he seeks foreign investment in the country; he’s already promised “fully expedited approvals and permits” for any person or company that invests more than $1 billion. It’s hard to see why Nippon’s proposal would be excluded.
Even if Trump doesn’t intervene, federal courts could breathe new life into the stalled merger. After Biden blocked the deal, which would have seen Nippon pay $55 a share for US Steel, the two companies immediately filed multiple lawsuits in an attempt to secure a fresh review. Burritt said the companies will argue that Biden “tainted” the national security review to curry favor with union leaders who opposed the transaction.
Nippon CEO Eiji Hashimoto demonstrated the company’s unwavering nerves of steel and said the company will not back down. “There is no reason or need to give up,” he was reported to have said; “we simply cannot accept it.” The Biden administration delayed enforcement of its disapproval until June, which will allow the courts time to consider the petitions.
Cleveland-Cliffs returns
There’s also an additional wildcard coming from a long-sticking thorn in the side of Nippon’s plans. Cleveland-Cliffs (NYSE: CLF), a competing steel firm based in Ohio, is renewing its interest in acquiring US Steel, and there are even reports that Nucor (NYSE: NUE) could be brought into the fold for a joint bid.
“I want to buy,” Cleveland-Cliffs CEO Lourenco Goncalves said earlier this week. “I have a plan, I have an all-American solution in place.” While a new offer could reportedly value US Steel in the high $30s a share, Cleveland-Cliffs had already been willing to pay as much as $54 a share in a rejected offer just over a year ago. That means they’d probably have to get back much closer to that level to ultimately be successful, and an actual bid could only come once Nippon’s deal is officially dead. US Steel shares are currently trading around $37.
US Steel and Nippon are hoping for a final Hail Mary pass that could come in the form of a court ruling or a bump from Trump, but even if they aren’t successful it seems like some kind of deal will eventually take hold. Investors, meanwhile, will be holding on to their seats for months to come. This roller coaster has a few more loops to go.