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Stories/News from Seeking Alpha

Steel of a deal

In an industry-shaking transaction announced just before WSB was published on Monday, Nippon Steel (OTCPK:NPSCY) of Japan agreed to acquire U.S. Steel (NYSE:X) for a whopping $14.9B. The all-cash transaction at $55.00 per share represented a 40% premium to the closing price of U.S. Steel (X) on Dec. 15, and sent the stock up 26% during the session to close at $49.59. Deep-pocketed Nippon hopes the acquisition will expand its global footprint at a time when many Japanese firms are looking for international growth as their country deals with a shrinking population crisis. Recall that the steel industry has also been in focus following the approval of the Infrastructure Investment and Jobs Act, which is expected to boost U.S. steel demand for investment in bridges, railways and other projects due to "Buy American" provisions in the legislation.

Money talks: A bidding war for U.S. Steel ensued in the summer after the company rejected an unsolicited $7.3B cash-and-stock bid from rival Cleveland-Cliffs (NYSE:CLF). To note, that deal was less than half of what Nippon would pay for the company only four months later. U.S. Steel (X) would go on to announce a strategic review process and invited several more offers, including those that were reportedly made by ArcelorMittal (NYSE:MT) and U.S.-based Nucor (NYSE:NUE).

It's not without controversy. Having a 122-year-old iconic American steel giant be taken over by a Japanese producer is prompting unions and politicians to speak up. The United Steelworkers are urging regulators to "fully scrutinize" the transaction and determine if the combination "serves the national security interests of the United States and benefits workers."

A number of Senators are also voicing opposition, like Pennsylvania's John Fetterman, who represents one of the most important states involved in the American steel industry. "It's absolutely outrageous," he declared. "Steel is always about security - both our national security and the economic security of our steel communities. I am committed to doing anything I can do, using my platform and my position, to block this foreign sale." Fellow Democratic Senator Bob Casey of Pennsylvania has also expressed his disapproval, as well as Republican Senator J. D. Vance of Ohio, showing some bipartisan support against the foreign takeover.

SA commentary: "The management teams at both firms believe that there will not be any major regulatory issues at play. Obviously, this is something we will have to watch," wrote SA Investing Group Leader Daniel Jones, who gave U.S. Steel (X) a Strong Buy rating just days before the big buyout. "Even if the deal were to fall through, I think there is a decent chance that another buyer could step in and pick up United States Steel at a price that is high enough to result in little to no downside from where the stock currently is trading for." (11 comments)

Calling time

Apple (AAPL) will soon halt sales of its Watch models in the U.S. amid an ongoing patent dispute with Masimo (MASI). Apple will no longer sell its Watch Series 9 and Watch Ultra 2 from December 21, to comply with an International Trade Commission ruling on an intellectual property dispute pertaining to watches with a blood oxygen feature. That hasn't stopped bumper forecasts from being assigned to the tech giant. Apple is expected to be the first stock to hit a $4T market cap by the end of 2024, according to Wedbush, given the pace of growth and monetization. Apple had hit $3T this year, making it the world's most valuable company. (109 comments)

Do not pass go

Nikola (NKLA) founder Trevor Milton has been sentenced to a four-year prison sentence by a federal court judge in New York City for securities and wire fraud. A U.S. federal grand jury indicted Milton in 2021, charging him with three counts of criminal fraud for lying about "nearly all aspects" of the business, while in 2022, a jury convicted Milton of misrepresenting important details about the company's products and technology. In October, an arbitration panel also awarded Nikola about $165M plus interest in a proceeding against Milton. SA Investing Group Leader Henrik Alex describes Nikola as an unmitigated disaster, with further disappointment likely next year. (36 comments)

International response

It's official! The U.S. and nine other countries have formed a naval task force to protect commercial vessels sailing through the Red Sea from Houthi attacks. Ships have been damaged and crew safety threatened, forcing companies to stop their vessels from entering the Bab el-Mandeb Strait. Under the new mission, military ships in the region will be positioned in a way that would provide umbrella protection to as many vessels as possible. The world's biggest container shipping lines halted shipping through the Red Sea over the weekend, while oil major BP (BP) joined them on Monday as freight rates and additional war risk premiums pushed higher. (6 comments)

Today's Economic Calendar
8:30 Housing Starts and Permits
12:30 PM Fed’s Bostic: "U.S. economy, outlook for business, and the Federal Reserve's role"
4:00 PM Treasury International Capital
6:00 PM Fed’s Goolsbee's Speech