Why Steel Giant U. S. Steel Shares Are Soaring Today

United States Steel Corp (NYSE: X) shares are soaring higher by around 28% following the news of its acquisition by Nippon Steel Corp NISTF for $14.1 billion-plus debt, with a total enterprise value of $14.9 billion.

The acquisition price of $55.00 per share represents a 40% premium to X's closing stock price on December 15, 2023. 

Recently, there were several reports that the company reportedly received multiple bids in excess of $40 a share.

The transaction has been unanimously approved by the Board of Directors of both Nippon and U. S. Steel.

The buyout will boost Nippon's manufacturing and technology capabilities and diversify the global footprint by significantly expanding its current production in the U.S., adding to its primary geographies of Japan, ASEAN, and India. 

With the acquisition, Nippon's total annual crude steel capacity will reach 86 million tonnes, driving towards its strategic goal of 100 million tonnes of global crude steel capacity annually.

Eiji Hashimoto, Nippon's President said, "The transaction builds on our presence in the United States and we are committed to honoring all of U. S. Steel's existing union contracts."

David B. Burritt, President and Chief Executive Officer of U. S. Steel, said, "This transaction realizes the tremendous value today in our company and is the result of our Board of Directors' comprehensive and thorough strategic alternatives process."

The acquisition is projected to close in the second or third quarter of calendar year 2024, subject to approval by U. S. Steel's shareholders, receipt of customary regulatory approvals and other customary closing conditions. 

Last week, U.S. Steel disclosed guidance for Q4 adjusted EPS of $0.20-$0.25 and adjusted EBITDA of ~$250 million.

Price Action: X shares are up 27.89% at $50.30 premarket on the last check Monday. 

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