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U.S. Steel clears arbitration for Nippon Steel deal

Published 09/25/2024, 11:26 PM
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PITTSBURGH - United States Steel Corporation (NYSE: NYSE:X), a prominent steel producer, has successfully met the conditions set by the Basic Labor Agreement (BLA) with the United Steelworkers (USW), paving the way for its acquisition by Nippon Steel. The Board of Arbitration, chosen by both U. S. Steel and the USW, ruled that no further action is necessary under the BLA for the transaction to proceed.

The arbitration decision comes after USW leadership filed grievances on January 12, 2024, alleging non-compliance with the successorship clause of the BLA. On August 15, 2024, the Board of Arbitration reviewed evidence and arguments, concluding that U. S. Steel had fulfilled the requisite conditions. Nippon Steel has recognized the USW as the bargaining representative, assured its commitment to honor existing agreements, and assumed all USW agreements relevant to employees at U. S. Steel.

The Board of Arbitration acknowledged Nippon Steel's written commitments, including a pledge to invest no less than $1.4 billion in facilities represented by the USW, avoid layoffs or plant closures for the duration of the BLA, and safeguard U. S. Steel's trade interests.

Karl Kocsis, Vice President and Chief Labor Relations Officer for U. S. Steel, expressed satisfaction with the arbitration outcome, highlighting the company's respect for union-represented employees and the USW. David Burritt, President and CEO of U. S. Steel, looked forward to advancing the transaction with Nippon Steel, citing significant investments and commitments that aim to benefit employees, communities, and customers.

The transaction is still subject to U.S. regulatory reviews and is expected to close by the end of the year. This development resolves all outstanding BLA issues related to the transaction, based on a press release statement.


In other recent news, US Steel has upheld its third-quarter 2024 EBITDA projection of around $300 million, aligning with previous estimates and analyst expectations from firms like BMO Capital, Jefferies, and Morgan Stanley. The company's earnings per share are expected to range between $0.44 and $0.48. Analysts from BMO Capital, Jefferies, and KeyBanc maintained their respective Outperform, Buy, and Sector Weight ratings on US Steel, while Morgan Stanley continued its Overweight rating, and GLJ Research upgraded the company's shares to Buy.

US Steel is preparing for the commencement of operations at the new Big River 2 facility in the fourth quarter, which is projected to incur about $40 million in related costs within the third quarter. However, the completion of the Nippon transaction remains uncertain. Despite these developments, US Steel's European segment is anticipated to post a quarter-over-quarter increase in adjusted EBITDA, while declines are forecasted in the Flat Rolled, Mini Mill/Big River, and Tubular segments.

These are recent developments that investors should take into account. The company remains confident in the approval of their pending transaction, following U.S. regulatory reviews, with the aim to finalize the deal before the year's end. Please note that this information is based on recent articles and analyst notes, and does not provide a comprehensive view of the company's operations or financial health.


InvestingPro Insights


As United States Steel Corporation (NYSE: X) moves forward with its acquisition by Nippon Steel, investors and stakeholders are keenly observing the company's financial health and market performance. According to recent data from InvestingPro, U. S. Steel boasts a market capitalization of $8.52 billion, reflecting its substantial presence in the industry. The company's P/E ratio stands at 14.82, suggesting a valuation that aligns with earnings. Notably, the adjusted P/E ratio for the last twelve months as of Q2 2024 is even more favorable at 11.64, indicating potential undervaluation by the market.

InvestingPro Tips highlight that U. S. Steel has maintained dividend payments for an impressive 34 consecutive years, showcasing a commitment to returning value to shareholders. Additionally, analysts predict the company will be profitable this year, a positive sign amidst the strategic changes and investments taking place. It's worth mentioning that the company has been profitable over the last twelve months, reinforcing the optimism surrounding its financial stability.

For investors looking for more in-depth analysis and additional InvestingPro Tips, there are currently 3 more tips available, which can be accessed through the company's page on InvestingPro: https://www.investing.com/pro/X. These insights could provide valuable context for the company's future in light of the ongoing acquisition process and its implications for the steel industry.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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