U.S. Steel Viewed as 'Raw Diamond' in GLJ Amid Hopes for Biden's Approval of Nippon Deal

On Monday, a statement from GLJ Research indicated that the likelihood of President Biden approving Nippon's proposal to acquire U.S. Steel has increased following consultations with government officials and industry experts. The firm revised its target price for U.S. Steel (NYSE:X) to $45.88 by the end of 2024, maintaining an "OUTPERFORM" rating for the stock.

This reassessment comes after significant changes in the probability of the deal closing. The likelihood of Nippon's offer to acquire U.S. Steel at $55 per share, previously considered unlikely, is now projected to be 50%. This shift in perspective follows a series of discussions and events suggesting a more favorable outcome for the acquisition.

In discussions with a government official last week, it was revealed that a decision from the Committee on Foreign Investment in the United States (CFIUS) is expected by September 23, with approval anticipated. It was also highlighted that a meeting is scheduled between the United Steelworkers Union president D. McCall and U.S. Steel one week prior to the CFIUS decision. This further emphasizes the union's support for the agreement.

Despite uncertainties regarding President Biden's stance, recent developments, including Nippon's commitment to invest $1 billion in U.S. Steel facilities and create 5,000 jobs, have contributed to a more optimistic outlook. The backing of the United Steelworkers Union and Biden's pro-union stance add to the perception that presidential approval is now more likely.

In conclusion, the report indicates a significant shift towards a more balanced view regarding expectations for the acquisition, moving away from the previously negative outlook. The updated target price reflects these developments and suggests that investors may see an undervalued opportunity in U.S. Steel shares.