Report on Nippon's Acquisition of U.S. Steel

On Monday, a report from GLJ Research, following consultations with government officials and industry experts, suggested an increased likelihood of President Biden approving Nippon’s proposed acquisition of U.S. Steel. The firm has revised its end-of-year 2024 estimated price target for U.S. Steel (NYSE:X) to $45.88 per share from a previous estimate, maintaining a BUY rating on the stock.

The reassessment comes after a significant shift in the perceived probability of the deal's closure. Previously considered improbable, the likelihood of Nippon’s bid to acquire U.S. Steel for $55 per share has now been estimated at 50%. This change in sentiment follows a series of discussions and events that hint at a more favorable outcome for the acquisition.

A conversation last week with a government contact revealed that the Committee on Foreign Investment in the United States (CFIUS) decision is anticipated by September 23, and approval is expected. The dialogue also highlighted an upcoming meeting between the President of the United Steelworkers labor union, D. McCall, and U.S. Steel, scheduled a week before the CFIUS decision, which further underscores the union’s support of the deal.

Despite the uncertainty surrounding President Biden’s stance, the recent developments—including Nippon’s commitment to invest $1 billion in U.S. Steel’s facilities and the creation of 5,000 jobs—have led to a more optimistic outlook. The support from the United Steelworkers labor union and Biden’s pro-union position contribute to the perception that presidential approval is now more likely.

In conclusion, the report indicates a notable shift from a previously negative forecast to a more balanced view on the acquisition's prospects. The updated price target reflects these developments, suggesting that investors may be witnessing an underappreciated opportunity in U.S. Steel shares.

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