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Why United States Steel Stock Crushed The Market Today
A dramatic improvement in the prospects for United States Steel (NYSE: X) being sold to a foreign buyer led to a rally in the stock on the last trading day of the year. The storied industrial stock closed Tuesday nearly 10% higher in price on the back of the news. This was its most significant one-day gain in 2024, and was a sharp contrast to the 0.4% drop of the S&P 500 index.
A twist in the takeover saga
The news item that got the market so excited was published in The Washington Post. Citing a document sent to the White House on Monday, the newspaper wrote that Nippon Steel (OTC: NPSC.Y) has sent President Joe Biden a new proposal in its bid to acquire U.S. Steel. With some limits, Nippon Steel is proposing that if its bid is approved, it would grant the federal government a veto over any reduction in the company's production capacity.
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Previously, Nippon Steel had proposed that only independent members of U.S. Steel's board of directors would have such power.
The new offer is an attempt to get the deal approved by the president, in whose lap it has landed, before he leaves office on Inauguration Day. Japan-based Nippon Steel's $14.9 billion deal for its U.S. peer hangs in the balance, following objections from the Treasury Department's Committee on Foreign Investment in the United States (CFIUS). That body has warned of potential national security risks if U.S. Steel were to be sold to a foreign company.
Handing off to Trump?
Nippon Steel's new offer is quite the sweetener, but it's questionable whether it will be sufficient to sway Biden and his administration. He has clearly expressed his objection to the deal, and he might not ultimately end up deciding the matter anyway.
The new proposal will take some time to evaluate. It's very possible that any final decision on foreign acquisition of U.S. Steel will be up to incoming President Donald Trump -- who is famously more adverse to foreign investment in U.S. businesses.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
