U.S. Steel Corp. (NYSE:X) moved higher today by over 9% after a Bloomberg report said that Russia's biggest steel maker, OAO Severstal, is in talks with investment bankers to merge with local iron miners to create a $20 billion company, all in an effort to bid for the $8 billion U.S. Steel. The two potential local acquisitions are said to include ZAO Gazmetall and ZAO Metalloinves, which are controlled by billionaire Alisher Usmanov. The rumors stemmed from the Russian newspaper Kommersant, which quoted anonymous analysts at investment banks reporting that Severstal owner Alexei Mordashov is interested in buying U.S. Steel. This rumor is also supported by strong existing consolidation within the steel industry - particularly, the Mittal takeover of Arcelor which formed the world's largest steel company earlier this year. Finally, a spokesman for U.S. Steel didn't dismiss the rumor, saying: "We favor consolidation if it builds value for our shareholders, but we don't discuss any actions we may or may not be taking until the appropriate time." The rumor also helped other steel stocks climb sharply in morning trading. Combined, these factors make such an acquisition a possibility; however, there is still a lot of obstacles in the way. Regardless, this is definitely a stock to keep an eye on as the picture clears up in coming months.

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