Shares in the Pittsburgh-based firm are up more than 6% in the past month. — Bloomberg
NEW YORK: US Steel Corp is beating peers in the stock market as investors speculate that political and labour opposition to its US$14.1bil takeover by Nippon Steel Corp may be easing.
Shares in the Pittsburgh-based firm are up more than 6% in the past month, recovering more of the ground lost when President Joe Biden and Donald Trump voiced opposition to the deal.
In the same span, competitors Cleveland Cliffs Inc, Nucor Corp and Steel Dynamics Inc have posted double-digit declines.
The divergence coincides with Biden stepping down as a candidate in November’s elections, and the emergence of Kamala Harris and running mate Tim Walz.
While it’s unclear what stance Harris-Walz will take on the Japanese firm’s planned takeover, investors are betting the new Democratic ticket may keep the door ajar.
“The creep-up factor in my mind hasn’t really anything to do with fundamentals – it’s more so to do with the likelihood or not that this deal closes,” said Keybanc Capital Markets analyst Phil Gibbs.
“There’s probably been more hope or optimism that the deal could potentially close under a Harris administration.”
Nippon Steel agreed to buy US Steel in December, but opposition from the United Steelworkers (USW) union and both Trump and Biden left investors uncertain about the fate of a deal that’s still navigating federal foreign investment review.
To be sure, the USW has maintained its opposition, issuing a stern statement Monday accusing the firms of selling out workers and communities.
Wolfe Research analyst Timna Tanners, however, said some union members are warming to the deal as they weigh the possibility of a well-resourced global owner offering greater job security in a softening local market. — Bloomberg
