United States Steel (U.S. Steel) is experiencing upward movement in its stock price, likely due to increasing optimism that additional bidders will emerge for the former industrial giant. Currently, U.S. Steel’s stock is up 1.6% at $35.37 in midday trading, surpassing the gains of the broader market as the S&P 500 and Dow Jones Industrial Average rise by 0.3% and 0.5% respectively.
In August, U.S. Steel announced that it was exploring strategic options, including the potential sale of all or part of its business. According to CNBC’s David Faber, bids for U.S. Steel are expected to be submitted by Friday, and up to five bidders are anticipated. While U.S. Steel declined to comment on the matter, one bidder has already been made public: Cleveland-Cliffs offered 1.023 shares of Cliffs stock and $17.50 for each share of U.S. Steel. At recent prices for Cliffs shares, this bid amounts to $34.74.
The fact that U.S. Steel’s stock is currently trading above the Cleveland-Cliffs bid price indicates that investors are optimistic about the possibility of a higher bid. Prior to U.S. Steel’s announcement of its strategic evaluation and the disclosure of the Cliffs bid, U.S. Steel stock was valued at $22.72.
While other steel companies like Nucor (NUE), ArcelorMittal (MT), Stelco (STLC.Canada), and privately held service center Esmark have been linked to U.S. Steel, no official announcements have been made regarding their involvement.
If Faber’s reports are accurate, investors can expect updates on the sale process in the near future. U.S. Steel’s management chose not to provide substantial updates to investors when reporting better-than-expected third-quarter results in late October.
Over the past 12 months, U.S. Steel stock has seen a nearly 40% increase, while Cliffs shares have risen approximately 12%. Meanwhile, benchmark steel prices have also surged by around 40%, presenting a positive outlook for commodity producers.