Nippon Steel closes US Steel acquisition under strict conditions
Nippon Steel completed its multi-billion-dollar acquisition of US Steel on Wednesday, granting rare veto-like power over strategic decisions to Washington with a "golden share".
The announcement concludes a saga that began in December 2023, when Nippon Steel agreed to acquire the linchpin of American steelmaking for $14.9 billion.
An outright buyout sparked bipartisan political opposition, including from US President Donald Trump, who railed against the proposed deal throughout the 2024 presidential campaign.
But last month he announced a pivot, branding the revamped venture -- blocked by former president Joe Biden on security grounds -- as a "partnership" rather than a takeover.
A national security agreement between the companies and the US government provides that approximately $11 billion in new investments will be made by 2028.
And Washington's non-economic golden share allows it to appoint one independent director as well as granting consent rights for proposed capital budget cuts among other powers.
Nippon Steel CEO Eiji Hashimoto said Thursday in Tokyo that this "won't hinder activities that we hope to conduct."
"The agreement is fully satisfactory to us, as it ensures the management freedom... essential for business investment," Hashimoto told reporters.
"We intend to start implementing measures for revitalisation and development as soon as possible," he said, promising not to "transfer jobs and production sites elsewhere."
It is "only natural" that the US government would be concerned about the takeover of a symbolic company, which dates back to 1901, Hashimoto added.
'Massive victory'
A source close to the matter said Nippon Steel had bought all common shares of US Steel, completing the merger.
The deal creates the world's fourth biggest steelmaker -- but Nippon Steel faces several big challenges, from trade tariffs to weak demand for steel products worldwide.
Nippon Steel shares were up 2.4 percent Thursday afternoon, even as Tokyo's benchmark Nikkei index slumped 0.9 percent.
Pennsylvania Senator Dave McCormick, a Republican, thanked Trump on X and called 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.
"We will use the most powerful tool workers have against global corporations: collective bargaining."
Biden had blocked the transaction in early January, shortly before leaving office.
He said that placing "one of America's largest steel producers under foreign control" could "create risk for our national security and our critical supply chains."
Government influence
Besides agreeing to keep US Steel's Pittsburgh headquarters and to maintain US production, the national security agreement calls for a majority of US Steel's board to be US citizens, as are key leaders including the CEO.
The "golden share" does not entitle the US government to dividends, nor does it require Washington to make investments in the company.
While the structure gives the government "extraordinary" influence, the mechanism could be difficult to enforce in a downturn if Nippon fails to comply, said Atlantic Council senior fellow Sarah Bauerle Danzman.
Nippon Steel's promise of investment means more steel will be produced in the United States, leading to a likely drop in steel prices, said Gordon Johnson, CEO of GLJ Research.
"US Steel was talking about closing significant capacity in Pennsylvania, which would have devastated a big swathe of that economy. So this is definitely a win for the US worker, it's definitely a win for the US economy," he told AFP.
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