US government to get a golden share in the US Steel-Nippon Steel merger
The US government is set to obtain a so-called golden share in United States Steel Corp. as a prerequisite for endorsing Nippon Steel Corp.’s proposed acquisition of the American firm. The proposal, which would grant the government de facto veto rights over specific corporate decisions and appointments, is part of ongoing discussions between regulators and the companies, according to sources familiar with the situation. On Friday, President Donald Trump unveiled a “partnership” that entails $14 billion in new investments, yet offered scant further details. The scope of such veto powers remains ambiguous, as does the administration’s decision concerning the current $14.1 billion merger proposal. The proposal presented to the Committee on Foreign Investment in the US and the President encompassed the initial $55-per-share acquisition, supplemented by additional investment, according to two individuals acquainted with the situation.
The golden share — reported earlier by Nikkei — is poised to be incorporated into the national security agreement that is usually established to align with conditional Cfius approvals, according to several individuals who requested anonymity as discussions progress. The ambiguity surrounding whether the powers would constitute an equity stake or merely serve as mitigation powers remains unresolved. Golden shares, which permit the owner to outvote other shareholders under specific conditions, are uncommon in the US, where the government generally does not possess stakes in publicly traded companies. However, they have found application in various countries, such as Italy, Brazil, and the UK — frequently employed to maintain state oversight over critical decisions at privatized or strategically important firms.
This marks the most recent development in a takeover saga that has persisted for almost eighteen months. Trump plans to conduct a rally in Pittsburgh on Friday to celebrate the agreement as a triumph for his tariffs and American labor, although sources indicate that all parties are still finalizing the particulars. A spokesperson for the White House refrained from providing specifics on the issue. “The President looks forward to returning to Pittsburgh, Pennsylvania on Friday to celebrate American Steel and American Jobs,” spokesman Kush Desai stated.
Senator Dave McCormick, a Republican from Pennsylvania and an ally of Trump, validated several details during an interview with CNBC that was broadcast on Tuesday, notably the $2.4 billion earmarked for investment in the Mon Valley plant. He framed the arrangement as fundamentally a fait accompli, similar to Trump’s announcement last week, although the White House has yet to make a clear public commitment to endorsing the sale via Cfius. “The control structure is going to be somewhat unique,” McCormick stated. “It’ll be a US CEO, a US majority board, and then there’ll be a golden share, which will essentially require US government approval of a number of the board members, and that’ll allow the United States to ensure production levels aren’t cut and things like that.”
Nippon Steel had sought to finalize the agreement that would grant it complete control, despite Trump’s public assertion that US Steel should remain free from foreign ownership. McCormick recognized that Nippon Steel would include board members and that US Steel would “be part of their overall corporate structure.” The proposal put forth by the Japanese firm enables the United States to “essentially have our cake and eat it too,” according to the Senator. Neither company provided a statement, nor did the Treasury Department.
Even with a deal, procedurally, Trump would need to reverse former President Joe Biden’s decision to obstruct the merger on the basis of national security. Details remain limited, as investors continue to lack clarity on the allocation of the additional $14 billion investment. “The rhetoric around a ‘golden share’ sounds flashy, but what’s likely on the table is a traditional Cfius agreement that gives the government approval rights over actions like offshoring or shutting down production lines,” said Jim Secreto, former Counselor for Investment Security at the Treasury Department under the Biden administration.
Trump’s social media post On Friday, US Steel shareholders received the most encouraging update since the company’s December 2023 announcement regarding its sale to Nippon Steel in a cash transaction valued at $55 per share. On Friday, shares reached their highest price in 14 years following Trump’s post. They increased by 2 per cent to $53.04 on Tuesday, approaching Nippon Steel’s $55-a-share cash offer. Nippon Steel shares, which experienced an initial rise this week, have subsequently reduced their gains and were down 1.2 per cent by late morning in Tokyo.
Analysts at SMBC Nikko indicated that the deal, in its present form, represents an enhancement over their worst-case scenario — albeit with limitations for Nippon Steel. “We think the arrangement in question would make it difficult to restructure in response to a market downturn,” analysts Atsushi Yamaguchi and Takuya Maeda wrote. “In any case, the necessity for substantial investment and capital expenditures will likely lead to a temporary deterioration of Nippon Steel’s financial standing, thereby increasing the likelihood of equity financing.” “If the acquisition succeeds, we think the company will need to demonstrate returns on its investments relatively quickly.”
