Nippon seals US Steel deal with golden share sweetener for Washington
NEW YORK, June 19 — Nippon Steel and US Steel announced yesterday they have completed a long-debated transaction granting the US government a 'golden share' — a veto-like power over the Japanese company's strategic decisions.
The agreement modifies a transaction originally announced in December 2023 in which Nippon Steel agreed to acquire US Steel for US$14.9 billion (RM63.5 billion).
But the outright acquisition of the iconic US company sparked bipartisan political opposition, including from President Donald Trump.
Trump, who railed against the proposed deal throughout the 2024 presidential campaign, last month announced a pivot, branding the revamped venture as a 'planned partnership.'
And the US government will now have a non-economic 'golden share' that gives it a say on Nippon's plans for US infrastructure and jobs.
Yesterday, US Steel filed a notice with US securities regulators to delist its shares on the New York Stock Exchange. The NYSE halted trading, pointing to a 'merger effective' order.
'The companies have now completed the transaction as contemplated by their merger agreement,' Nippon and US Steel said in a joint press release.
'The companies have also entered into a National Security Agreement with the US Government, and US Steel will issue a Golden Share to the US Government.'
Nippon Steel has bought all common shares of US Steel, completing the merger, a source close to the matter said yesterday.
Pennsylvania Senator Dave McCormick, a Republican, cheered the deal's closing, thanking Trump on X and calling the outcome 'a massive victory for working families in the Mon Valley, our economy, our national security, and America's manufacturing future!'
But the United Steelworkers (USW) union, which vigorously fought the deal, vowed to 'continue watching, holding Nippon to its commitments,' according to a statement.
'And we will use the most powerful tool workers have against global corporations: collective bargaining.'
Post-election window of opportunity
Under the December 2023 transaction, Nippon agreed to pay US$55 per share for US Steel, an all-cash deal that included a 40 per cent premium and pitched the combined company as the 'best steelmaker with world-leading capabilities.'
While the transaction included a pledge to maintain the name US Steel and the company's Pittsburgh headquarters, industry watchers expected an exodus of US Steel executives.
But after the deal sparked bitter opposition from the USW and a broad range of politicians, including then president Joe Biden and former Ohio senator JD Vance — now Trump's vice president — Nippon stepped up its lobbying efforts in Washington and Pittsburgh to win support for a transaction that appeared for months to be on life support.
In early January, shortly before leaving office, Biden blocked the transaction, saying that placing 'one of America's largest steel producers under foreign control' could 'create risk for our national security and our critical supply chains.'
But backers of the deal had been hoping the shift in political climate following Trump's election victory over Biden's vice president Kamala Harris might revive the deal's prospect.
Besides agreeing to keep US Steel's Pittsburgh headquarters and to maintaining US production, the revamped deal's national security agreement calls for a majority of US Steel's board to be US citizens and for key leaders, including the CEO, to be US citizens.
The government's 'golden share' will allow it the right to appoint one independent director and grant it consent rights for proposed capital budget cuts, the redomiciling of activities outside the United States and on acquisitions in the United States.
The 'golden share' does not entitle the US government to dividends, nor does it require Washington to make investments in the company.
Atlantic Council senior fellow Sarah Bauerle Danzman said the deal is not a nationalization of US Steel because the government will not be involved in day-to-day management and 'because the United States is not taking equity stakes away from owners.'
While the structure gives the government 'extraordinary' influence, the mechanism could be difficult to enforce in a downturn if Nippon fails to comply, Danzman said.
'How would the US government compel Nippon to increase investments to its promised amount?' wrote Danzman, adding that Washington's enforcement options 'are relatively weak here, especially if Nippon finds itself in a fragile economic position.' — AFP
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