24/7 Wall St. Key Points:
- Following the failure of a $55/share buyout deal from Japan’s Nippon Steel, U.S. Steel (NYSE: X | X Price Prediction) is struggling.
- Reportedly investigating a consortium proposal for U.S. Steel are domestic steel producers Cleveland-Cliffs (NYSE: CLF) and Nucor (NYSE: NUE), but any possible offer is believed to be much below Nippon’s original estimate.
- Given the lack of a competitive foreign bid, investors should moderate expectations for a quick return to $50+ levels even if the stock can offer a speculative opportunity.
- U.S. Steel’s best days may be behind it, but things are just revving up for “The Next Nvidia Stocks”. Click here to see what all the excitement is about before everyone else catches on.
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Transcript:
[00:00:04] Douglas McIntyre: So U.S. Steel’s a mess. I mean, a real, real mess.
[00:00:11] Douglas McIntyre: It appeared that there was, it was going to be bought. I think there was a point at which people thought there was a 99 percent chance that it would change hands. Now, because of political consideration, international political, problems. It’s probably not going to get bought, at least not by, by Nippon Steel.
[00:00:34] Lee Jackson: It doesn’t appear it will. No.
[00:00:36] Douglas McIntyre: So who wants, does anybody want it? I mean, is there still hope?
[00:00:42] Lee Jackson: I kind of feel sorry for the management and the employees, Doug, because the bid, the Nippon bid was huge. It was 55 a share. And if you look now, I’m going to stocks, what 30 is back in the 20s. I’m not looking at it. You know, quote screen now, but, now there’s talk that, I mean, ostensibly, they didn’t want a Japanese company to own it, even though Nippon had said, nothing’s going to change.
[00:01:09] Lee Jackson: Nobody loses their job. Everybody stays, you know, in Pittsburgh, or, you know, what the other plants that they have around the iron and rust belt, and, So a lot of people, they were a little pissed off because they’re like, well, that would have been great for me and my family and everything. But apparently there’s another, like a consortium of Cleveland Cliffs and Nucor, and they’re both solid steel firms.
[00:01:35] Lee Jackson: And apparently they’re trying to put a bid together to go after a U.S. Steel, but it’s far below the Nippon bid.
[00:01:43] Douglas McIntyre: So you think it’s, it might be a speculative buy, but not in the 50s. Don’t look for it to go into the 50s.
[00:01:52] Lee Jackson: No, I mean, be buying 55 calls because I don’t think it goes there. But I mean, If, if Cleveland Cliffs and Nucor want it bad enough, and then they probably have the wherewithal to certainly get it done at a certain level, that would probably be something that, you know, the, the commission and, you know, the people in, in Washington could be with. But it’s weird because you see the media talking to, executives from U.S. Steel and I’m talking to the workers there and they’re all very disappointed, you know, and, and I don’t see how Japan owning a controlling stake in them. I mean, they own a controlling stake in Toyota (NYSE: TM). There’s a Toyota plant 40 miles from me,
[00:02:42] Douglas McIntyre: I know.
[00:02:43] Lee Jackson: And, and so I just, I just don’t, I don’t really get that argument, but it’ll be interesting to see what happens, especially if Cleveland Cliffs and Nucor are able to put a deal together.
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