Nippon Steel finalizes $15B takeover of US Steel after sealing national security agreement

Key Points

• Nippon Steel has finalized its $15 billion acquisition of U.S. Steel after securing national security approval by including a “golden share” provision granting the federal government oversight rights.
• The merged entity will become the world’s fourth-largest steelmaker, combining Nippon Steel’s advanced technologies with U.S. Steel’s established U.S. market presence.
• Under the national security agreement, the federal government can appoint an independent director and exercise consent rights over major decisions like facility closures, capital reductions, and changes to the company’s name or headquarters.
• The deal overcame opposition from both Presidents Biden and Trump and includes Nippon Steel’s commitment of $11 billion in capital investments in U.S. Steel facilities through 2028.

HARRISBURG, Pa. (AP) — Nippon Steel and U.S. Steel said Wednesday they have finalized their “historic partnership,” a deal that gives the U.S. government a say in some matters and comes a year-and-a-half after the Japanese company first proposed its nearly $15 billion buyout of the iconic American steelmaker.

The pursuit by Nippon Steel for the Pittsburgh-based company was buffeted by national security concerns and presidential politics in a premier battleground state, dragging out the transaction for more than a year after U.S. Steel shareholders approved it.

It also forced Nippon Steel to expand the deal, including adding a so-called “golden share” provision that gives the federal government the power to appoint a board member and a say in company decisions that affect domestic steel production and competition with overseas producers.

“Together, Nippon Steel and U.S. Steel will be a world-leading steelmaker, with best-in-class technologies and manufacturing capabilities,” the companies said.

The combined company will become the world's fourth-largest steelmaker in an industry dominated by the Chinese, and bring what analysts say is Nippon Steel's top-notch technology to U.S. Steel's antiquated steelmaking processes, plus a commitment to invest $11 billion to upgrade U.S. Steel facilities.

In exchange, Nippon Steel gets access to a robust U.S. steel market, strengthened in recent years by tariffs under President Donald Trump and former President Joe Biden, analysts say.

Anthony Rapa, a Blank Rome lawyer in Washington who advises firms on trade, operations and investments, said the government’s intervention in the Nippon Steel-U.S. Steel deal is another sign of a trend that the U.S. is increasingly equating economic security with national security.

He doesn't see the government's intervention as chilling foreign investment and said a “golden share” mechanism — to the extent it's used again by the U.S. to ease national security concerns — is likely to emerge only in sensitive and complex cases.

Still, the episode could cause investors to be more strategic in how they approach transactions, Rapa said.

Anil Khurana, executive director of the Baratta Center for Global Business at Georgetown University, said the U.S. government's interest in the deal is a sign of the growing importance it places on economic competition with China.

“Clearly the definition of what is national security has expanded to included national economic security, which is where I think this comes in,” Khurana said.

Nippon Steel and U.S. Steel did not release a copy of the national security agreement struck with Trump's administration.

But in a statement Wednesday, the companies said the federal government will have the right to appoint an independent director and get “consent rights” on specific matters.

Those include reductions in Nippon Steel's capital commitments in the national security agreement; changing U. S. Steel’s name and headquarters; closing or idling U.S. Steel’s plants; transferring production or jobs outside of the U.S.; buying competing businesses in the U.S.; and certain decisions on trade, labor and sourcing outside the U.S.

Nippon Steel announced in December 2023 that it planned to buy the steel producer for $14.9 billion in cash and debt, and committed to keep the U.S. Steel name and Pittsburgh headquarters.

The United Steelworkers union, which represents some U.S. Steel employees, opposed the deal, and Biden and Trump both vowed from the campaign trail to block it.

Biden used his authority to block Nippon Steel’s acquisition of U.S. Steel on his way out of the White House after a review by the Committee on Foreign Investment in the United States.

After he was elected, Trump changed course, expressing openness to working out an arrangement and ordering another review by the committee.

That’s when the idea of the “golden share” emerged as a way to resolve national security concerns and protect American interests in domestic steel production.

As it sought to win over American officials, Nippon Steel began adding commitments. Those included putting U.S. Steel under a board made up of a majority of Americans and a management team of Americans.

It pledged not to conduct layoffs or plant closings as a result of the transaction or to import steel slabs to compete with U.S. Steel’s blast furnaces in Braddock, Pennsylvania and Gary, Indiana.

In the final agreement, it pledged to produce and supply U.S. Steel from domestic sources — such as mining operations in Minnesota — and to allow U. S. Steel to pursue trade actions under U.S. law.

It also made a series of bigger capital commitments in U.S. Steel facilities, tallying $11 billion through 2028, it said.

Nippon Steel said its annual crude steel production capacity is expected to reach 86 million tons, closer to its goal of 100 million tons.

The United Steelworkers on Wednesday noted that its current labor agreement with U.S. Steel expires in 2026.

"Rest assured, if our job security, pensions, retiree health care or other hard-earned benefits are threatened, we are ready to respond with the full strength and solidarity of our membership," its international president, David McCall, said in a statement.

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