After a lengthy 18-month process, Japanese firms are confirming the significant influence of the Trump administration. On Wednesday, Nippon Steel finalized its acquisition of US Steel for $14.9 billion.
As per the agreement, Nippon Steel purchased all US Steel shares at $55 each, mirroring an offer made back in December 2023 to a well-known, struggling manufacturer in the industry.
The accompanying press release also details a national security agreement that allows President Trump to appoint board members and obtain non-economic “golden shares.”
Eiji Hashimoto, Nippon Steel’s chairman and CEO, expressed gratitude towards Trump, stating that “Nippon Steel is eager to embark on a new chapter in the rich history of American steel.”
Securing this measure was not easy, as it faced substantial political pushback. The government’s level of control acknowledged in this deal helped navigate those challenges.
86 million tonnes of steel capacity
The golden shares provide significant veto powers, enabling decisions related to idling plants, scaling back production capacity, and even moving jobs overseas.
The agreement also restricts the potential relocation of US Steel’s headquarters from Pittsburgh and the transfer of jobs abroad, along with name changes and future acquisitions of competitor firms, according to the release.
National security legal experts mentioned that including golden shares was a strategic choice to secure approval from the Foreign Investment Committee in the US, which assesses foreign investments for national security risks.
This acquisition is set to enhance investments in the steel sector until 2028, featuring an initial $1 billion designated for new US factories, with projections suggesting an increase of $3 billion in the following years, as reported by Reuters.
Nippon Steel, the fourth largest steel producer globally, will also benefit from numerous American infrastructure projects, while foreign competitors will face a hefty 50% import fee on steel. Moreover, Japanese firms will dodge a $565 million dissolution fee if they can’t secure the necessary approvals.
Nippon Steel announced that its annual crude steel production capacity is anticipated to reach 86 million tonnes, aligning more closely with its strategic goal of achieving a 100 million tonne capacity worldwide.
A rocky road
While closing this deal seemed uncertain at times, many investors perceived a sense of optimism after Trump provided what could be described as a vague endorsement during a rally on May 30, where he referred to Nippon Steel as “a great partner.”
Previously, the contract encountered opposition from the United Steelworkers Coalition, and both Democrats and Republicans expressed their dissent as they sought support from voters in Pennsylvania, a critical swing state.
Just before leaving office in January, Biden halted the deal citing national security concerns, prompting corporate challenges and a response from the Biden administration.
However, the steel company identified opportunities under Trump’s administration and initiated a new 45-day national security review regarding the proposed merger.
Yet, Trump’s public statements announcing investments by Japanese companies and considering minority stakes in Nippon Steel have stirred some confusion. His comments at the May 30 rally ignited some hope, and the official approval came through an executive order that facilitated business mergers contingent upon signing the national security agreement giving the US government a golden share.
