Why US Steel Soared Twice? Still Not Ceiling Yet?
$U.S. Steel(X)$ surged by 41.1% on Monday, reaching a new high since April 2022.
This increase was attributed to recent bidding activities initiated by two companies, resulting in a competitive bid scenario.
Esmark Inc. has announced its intention to acquire United States Steel through a cash offer of $35 per share, totaling approximately $7.8 billion. The chairman of United States Steel has a background as an executive and legal representative of the company, lending credibility to the potential for a successful transaction.
Previously, $Cliffs Natural Resources(CLF)$ proposed a cash and stock acquisition at $32.53 per share, an offer that was declined by United States Steel. Interestingly, in its response letter to Cleveland-Cliffs' proposal on Sunday,
United States Steel stated that it cannot ascertain whether the acquisition proposal accurately reflects the company's complete and fair value, implying a belief that the company may be undervalued.
The company further expressed that it has received multiple unsolicited offers and anticipates more acquisition proposals. It has also initiated a comprehensive review of strategic alternative options.
The two bidders in question are Esmark Steel Group, a prominent value-added flat-rolled steel processor and distributor, and Cleveland-Cliffs Inc., which holds control over roughly half of the U.S. flat-rolled steel market and nearly 100% of the U.S. iron ore market. Both acquisitions would involve vertical integration across the supply chain.
Some highlights,
1. Regardless of whether Esmark or CLF succeeds, the acquisitions are likely to yield synergistic effects, with projected synergies exceeding $500 million for CLF.
2. Given that the merger would create the largest steel producer in the U.S., regulatory authorities are expected to conduct a thorough antitrust review.
3. Anticipated positive effects on other players in the industry, including potential acquisition targets, suggest that this news will catalyze activity across the sector. Companies such as $Stelco Holdings Inc.(STZHF)$ , $Steel Dynamics(STLD)$ , $Algoma Steel Inc.(ASTL)$ and $Nucor(NUE)$ are among those likely to experience momentum due to this development.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
I hope US Steel doesn’t walk too slow. The only real offer is LG. And my bet is the market will drive X price down over the next few days. And the holder will start getting angry and push a deal through. LG has them and will not get push around by other so call offers. Let’s go.
I have been thinking about this deal. Seems to me the way to make the most money out of the CLF and X deal. Is to let X fall and CLF rise. When we think it is about time for the deal to finalize start buying X hand of fist. In an ideal world of course. What do you guys think? No matter what it's going to be one fun ride:)
I think CLF was up because investors think someone might go after CLF, not because of buying X.
CLF offer will look better and better as the stock reaches 18 soon.
CLF and X will be a powerhouse together:) LG is striking while the iron is hot!