With US Steel Buyout a Go, Let's Talk About the Golden Share
Nippon Steel and US Steel, a major American steel manufacturer, announced on June 13 that their deal had been approved by the United States government. President Donald Trump signed an executive order approving the deal on the same day.
Approval of the acquisition was contingent upon Nippon Steel entering into a "National Security Agreement" with the US government. Under the agreement, the US government will be issued a "golden share." It gives the president veto power over vital US Steel management issues that might impact national security.
The golden share only provides the President with veto power. At the same time, the government will not have any financial stake in the company.
Nippon Steel will be allowed to hold 100% of the common shares of US Steel, making it a wholly owned subsidiary. The acquisition is expected to be completed quickly. Screenshot of the landing page for the United States Steel (US Steel) website (screenshot verified April 15, 2025)
For the two companies, expansion of scale is imperative to counter Chinese steelmakers. Currently, China accounts for the majority of the world's crude steel production. The new tie-up of Japanese and American steel makers is also highly significant in terms of economic security since Japan and the US are allies. We welcome the US government's approval of the deal.
Steel is required for building warships and other defense assets. Therefore, ensuring a domestic supply is considered essential from a security perspective. For that reason, the US government has protected steel as an important industry.
However, it cannot be denied that long-standing protectionist policies have stalled technological innovation and capital investment in the US steel industry. This is a cause behind its reduced international competitiveness.
As approved, the deal calls for Nippon Steel to invest about $11 billion USD (about ¥1.6 trillion JPY) in US Steel by 2028. The money will be used for updating outdated facilities and equipment, along with building new steel plants.
Since Nippon Steel's demand that US Steel become a wholly owned subsidiary has been met, it will now be in a position to provide advanced technologies. Prominent among those are electromagnetic steel sheets for electric vehicles. It should also further the development of the American steel industry. Nonetheless, a series of actions taken by the US government along the way have left considerable fallout. President Trump speaks at a rally in May, held at one of US Steel's major factories Pennsylvania. (©Kyodo)
The proposed acquisition was first announced in December 2023. However, in the runup to the 2024 presidential election, then-President Joe Biden and presidential candidate Donald Trump announced their strong opposition.
Biden issued an order banning the deal on January 3, citing national security concerns. However, he never clearly explained why acquisitions by companies in allied countries should be a security concern. His stance must be judged as nothing but unjustified political intervention.
Even now, the details of Nippon Steel's national security agreement as a condition of approving the acquisition, and the scope of the President's golden share veto power, have yet to be clarified.
President Trump has said, however, "We have a golden share, which I control, our president controls." In order for the acquisition to achieve optimum results, this mechanism should not overly bind the management judgment of Nippon Steel.
(Read the editorial in Japanese .)
Author: Editorial Board, The Sankei Shimbun
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