On Thursday, Wolfe Research maintained its Peerperform rating on US Steel (NYSE: X), amidst heightened political and union opposition to the proposed Nippon takeover.
The firm outlined potential scenarios for the company's future, including the possibility of a post-election deal with concessions, an acquisition by Cleveland-Cliffs Inc. (NYSE:CLF), or US Steel remaining independent.
The analyst from Wolfe Research highlighted the growing political resistance to the takeover, as well as union protests, suggesting these factors make it more likely for US Steel to continue on its own. The firm presented three potential outcomes for the steel manufacturer: a delayed transaction with union concessions, a possible buyout by Cleveland-Cliffs, or the company retaining its independence.
The analysis further noted that US Steel is not compelled to accept a lower bid from Cleveland-Cliffs, and there are significant antitrust concerns with a merger between the two companies. This was echoed in a recent Wall Street Journal article, which indicated the White House's stance against such a combination.
Moreover, the Wolfe Research analyst mentioned that the relationship between US Steel and Cleveland-Cliffs is presumably strained. With no alternative bidders on the horizon, especially after Nucor Corporation (NYSE:NUE) expressed its decision to not overpay during its first-quarter earnings call, and President Biden's remarks suggesting that foreign ownership is unlikely, US Steel's path forward remains uncertain.
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