U.S. will have golden share in Nippon Steel’s takeover of U.S. Steel, lawmaker says

An employee enters Nippon Steel's plant in Kashima, Japan on Dec. 6, 2024. (Ayaka McGill / AP Photo)

The U.S. government will have veto power over key decisions relating to U.S. Steel, as part of a deal with Nippon Steel that would approve the Japanese firm’s bid for the well-known American steel company, a U.S. lawmaker said on Tuesday.

The details are laid out in what is called a national security agreement the companies will sign with the U.S. government, said Republican Senator David McCormick of Pennsylvania, where U.S. Steel is headquartered.

“It’ll be a U.S. CEO, a U.S. majority board and then there will be a golden share, which will essentially require U.S. government approval of a number of the board members, and that will allow the United States to ensure production levels aren’t cut and things like that,” he told CNBC in an interview after Nikkei reported that a golden share was under consideration.

It was not immediately clear if McCormick was announcing a new part of the deal beyond prior pledges made by the companies to the Committee on Foreign Investment in the U.S., which reviews foreign investments for national security risks and has reviewed Nippon Steel’s bid for U.S. Steel twice.

But on Tuesday, investors appeared confident the deal would soon close, with U.S. Steel shares trading up 1.6 per cent to US$52.84 a share, close to their highest point since the deal was announced.

U.S. President Donald Trump was expected to address the deal in a rally at a U.S. Steel plant in Pennsylvania this week.

In response to questions about the deal, White House spokesperson Kush Desai said, “The President looks forward to returning to Pittsburgh ... on Friday to celebrate American Steel and American Jobs.”

Nippon Steel declined to comment and U.S. Steel did not respond to a request for comment.

National security agreements get worked out in reviews led by the Committee on Foreign Investment in the U.S., which scrutinizes foreign investments for national security risks and has reviewed Nippon Steel’s proposed merger twice.

In an NSA term sheet proposed to CFIUS in September 2024, Nippon Steel pledged that a majority of U.S. Steel’s board members will be American, and that three of them -- known as the “independent U.S. Directors” will be approved by CFIUS.

“U.S. Steel may reduce Production Capacity if and only if it is approved by a majority of the Independent U.S. Directors,” the term sheet states, adding that core U.S. managers will be U.S. citizens.

Japan’s top steelmaker has since December 2023 sought to seal a $14.9-billion bid to acquire U.S. Steel at $55 a share.

Both President Donald Trump and former President Joe Biden expressed opposition to the tie-up, arguing U.S. Steel should remain American-owned as they sought to woo voters in Pennsylvania ahead of the November presidential election.

Biden formally blocked it in January on national security grounds, prompting a lawsuit by the companies that alleged the review process had been unfair. The Biden White House disputed that view.

Trump launched a fresh CFIUS review of the deal in April. On Friday he appeared to finally give it his blessing in a social media post, noting that the “planned partnership” would create “at least 70,000 jobs, and add $14 Billion Dollars to the U.S. Economy.” The post sent U.S. Steel’s share price up over 20 per cent.

But on Sunday, Trump cast doubt over that interpretation, noting in remarks to reporters that “It’s an investment and it’s a partial ownership, but it will be controlled by the USA.”

(Reporting by Kaori Kaneko, Kentaro Komiya, Yuka Obayashi; Additional reporting by Susan Heavey in Washington; Writing by John Geddie; Editing by Kirsten Donovan)