US Steel Stock Dips As Nippon Acquisition Faces Delays, Political Opposition But Retail Sentiment Remains Bullish

Shares of United States Steel Corp. slipped nearly 2% in early trading Thursday after Japan’s Nippon Steel extended the closing timeline for its $14.9 billion acquisition even as retail sentiment remained upbeat.

The deal, initially expected to close in late 2024, is now slated for the first quarter of 2025 as it undergoes extended scrutiny by U.S. regulators.

The Committee on Foreign Investment in the United States (CFIUS) failed to reach a consensus on the deal's implications for national security, passing the decision to President Joe Biden on Monday. 

Biden, who has previously voiced opposition to foreign ownership of U.S. Steel, now has 15 days to act. If he takes no action, the merger will be approved by default. 

President-elect Donald Trump has also opposed the deal, vowing to block it once in office. 

If the deal goes through, Nippon Steel would become the second-largest steel manufacturer globally.

"Nippon Steel hopes that the President will use this time to conduct a fair and fact-based evaluation of the acquisition. We remain confident that the acquisition will protect and grow U.S. Steel," the company said on Thursday.

Nippon added that the review process of the antitrust division of the U.S. Department of Justice was also underway, without specifying when it may end.

U.S. Steel Corp. Sentiment and Message Volume on Dec 26 as of 12:25 p.m. ET | Source: Stocktwits

On Stocktwits, retail sentiment around the stock remained ‘bullish’ with chatter at ‘normal’ levels as investors expressed optimism around the company's performance, regardless of whether the deal goes through. 

Despite the political opposition, U.S. Steel shareholders overwhelmingly voted to approve the acquisition in April.

Meanwhile, the two companies have also worked to assuage concerns over the combination. 

Nippon has offered to move its U.S. headquarters to Pittsburgh, where the U.S. steelmaker is based, and promised to honor all agreements in place between U.S. Steel and its union, USW, in an effort to mitigate concerns about the deal's impact on jobs and the industry.

Even Japan’s Prime Minister Shigeru Ishiba urged Biden to approve the merger to avoid marring recent efforts to strengthen ties between the countries, as recently as November.

Amid uncertainty around the acquisition, U.S. Steel shares are down over 34% year-to-date.

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