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U.S. Steel (X) Wraps Up the Acquisition of Big River Steel

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United States Steel Corporation (X - Free Report) recently announced the completion of the purchase of remaining equity of Big River Steel for roughly $774 million from cash on hand. The transaction conforms to customary closing conditions, including antitrust approval from the United States Department of Justice.

The acquisition creates North America’s first “Best of Both” integrated and mini mill steel company. With this acquisition, the company’s customers now have a truly sustainable source of the most advanced high strength steels. The company’s customer-centric organization will serve customers, employees, communities and investors with world competitive advantages from advanced process technology and intellectual capital necessary to produce advanced products.

In Dec 2020, the company had stated that it exercised its call option to acquire the remaining equity of Big River Steel.

U.S. Steel stated that it expects the transaction to be immediately accretive to its earnings. Further, the deal has potential for significant synergies that will boost long-term value.

Since acquiring 49.9% ownership stake in Big River Steel in October 2019, U.S. Steel has been creating strategic benefits and validating strong strategic rationale. This is now expected to be realized upon achieving full ownership.

Barclays played the role of exclusive M&A financial advisor, while PJT Partners and Rothschild & Co. served as financing advisors to U. S. Steel on the acquisition and Milbank LLP provided legal counsel.

Shares of U.S. Steel have surged 98.9% over a year compared with 24.3% rise of the industry.

U.S. Steel projects adjusted EBITDA of $55 million for the fourth quarter. Adjusted loss per share is forecast to be 85 cents. Notably, the company reported a loss of $1.21 per share in the third quarter and a loss of 64 cents in the prior-year quarter.

U.S. Steel witnessed improvement in flat-rolled demand in the United States and Europe in the fourth quarter, backed by strength in end-markets such as automotive, appliance and packaging. The flow-through of higher steel prices, improved operations and cost-saving initiatives are driving performance in the ongoing month.

United States Steel Corporation Price and Consensus

 

United States Steel Corporation Price and Consensus

United States Steel Corporation price-consensus-chart | United States Steel Corporation Quote

 

Zacks Rank & Key Picks

U.S. Steel currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Fortescue Metals Group Limited (FSUGY - Free Report) , BHP Group (BHP - Free Report) and Impala Platinum Holdings Limited (IMPUY - Free Report) .

Fortescue has a projected earnings growth rate of 75.5% for the current fiscal. The company’s shares have surged around 141% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BHP has an expected earnings growth rate of 59.5% for the current fiscal. The company’s shares have gained around 25% in the past year. It currently flaunts a Zacks Rank #1.

Impala has an expected earnings growth rate of 189.4% for the current fiscal. The company’s shares have rallied around 31.8% in the past year. It currently sports a Zacks Rank #1.

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