The blocked $14.9 billion sale of US Steel (X) to Japan’s Nippon Steel begs the question of what comes next for the iconic Pittsburg-based steelmaker.
On Friday, shares of US Steel fell more than 6% after President Biden announced his decision to to block foreign ownership of the American company.
Union leaders, politicians and competitor Cleveland-Cliffs (CLF) an original bidder for US Steel, have all weighed in on the merger since it was announced in 2023.
“It’s been a highly politicized decision the entire way through” Josh Spoores, steel analyst at CRU Group, told Yahoo Finance on Friday.
The analyst notes its unlikely Cleveland-Cliffs which has hinted it’s still interested in acquiring its competitor, would end up with the purchase.
“I think it’s possible but I don’t know that US Steel would be interested or that they have to do that. They’re in a much better position today than they were a few years ago and I think US Steel is perfectly situated to run their assets as their own operator today,” said Spoores.
However the analyst notes industry capacity will likely be reduced amid a backdrop of lagging steel prices.
“Nippon had said they would invest and wouldn’t take anything [capacity] down. But now we’re at the point where prices are down, profits are down, it’s likely that US Steel takes down a facility,” said the analyst.