Highlights
- Nippon Steel Corp. and United States Steel Corp. announced the finalization of their merger agreement on June 18, 2025.
- The parties issued a press release detailing the measures contained in a national security agreement with the Committee on Foreign Investment in the United States (CFIUS) after a June 13, 2025, executive order from the Trump Administration that requested the national security agreement as a condition to remove the prohibition on the proposed merger.
- A "Golden Share" for the U.S. government and a commitment by Nippon Steel to make $11 billion in new investments in U. S. Steel by 2028 stand out as part of the mitigation measures negotiated with CFIUS.
Nippon Steel Corp. and United States Steel Corp. published a press release on June 18, 2025, announcing the finalization of their merger agreement, executed on Dec. 18, 2023. Following a review by the Committee on Foreign Investment in the United States (CFIUS), President Donald Trump issued an executive order on June 13, 2025, allowing the transaction subject to the condition that the parties enter into a national security agreement (NSA). The NSA included the issuance of a "Golden Share" to the U.S. government to oversee compliance with the terms of the NSA, including the ability to block major decisions of the company. Nippon Steel also agreed to make $11 billion in new investment in U. S. Steel.
Background Information Relating to the Transaction
On Dec. 18, 2023, Nippon Steel, a Japanese steelmaker, entered into an agreement to acquire U. S. Steel in an all-cash transaction with a total enterprise value of $14.9 billion. The companies filed a voluntary notice of the transaction with CFIUS, prompting a review and investigation. Following the investigation, CFIUS referred the decision to then-President Joe Biden, who issued a presidential order on Jan. 3, 2025, prohibiting the transaction based on credible evidence that the acquisition may impair U.S. national security, infrastructure and supply chain resiliency.
Following the prohibition, Nippon Steel dropped its bid to fully acquire U. S. Steel and instead sought to "invest heavily" in the company without taking a majority stake. In response to this development, on April 7, 2025, President Trump ordered a new review of the transaction by CFIUS and recommendations of mitigation terms. CFIUS submitted its recommendation on May 21, 2025, and, on June 13, 2025, the president allowed the transaction to proceed provided that the parties enter into an NSA.
Key Terms of the NSA
The press release and related brief published by the companies outline the key terms of the NSA:
- $11 Billion New Investment. Nippon Steel will make approximately $11 billion in new investments in U. S. Steel by 2028, which includes an initial investment in a greenfield project that will be completed after 2028.
- U.S. Headquarters. U. S. Steel will remain a U.S.-incorporated entity and maintain its headquarters in Pittsburgh.
- Majority U.S. Board. A majority of the members of U. S. Steel's board of directors will be U.S. citizens. Nippon Steel will appoint up to eight directors, including two U.S. citizen independent directors, subject to CFIUS non-objection. The NSA also requires the establishment of a Government Security Committee consisting of three independent directors who report to the board of directors and the U.S. government to supervise compliance with the NSA and approve material decisions on trade measures.
- U.S. Management. U. S. Steel's key management personnel, including its CEO, will be U.S. citizens. U. S. Steel will also establish a Trade Committee – the details of which were not made public – composed solely of U.S. citizen employees.
- U.S. Production. U. S. Steel will maintain capacity to produce and supply steel from its U.S. production locations to meet market demand in the U.S.
- U. S. Steel Autonomous Trade. Nippon Steel will not prevent, prohibit or otherwise interfere with U. S. Steel's ability to pursue trade action under U.S. law.
- Golden Share to the U.S. Government. In addition to the mitigation terms mentioned above, U. S. Steel issued a "Golden Share" to the U.S. government.
The Golden Share
In general, "Golden Share" refers to a type of share that gives its shareholder significant control or veto power over certain decisions. These are typically held by a government to maintain some control over a company's activities. Golden Shares have been used in other countries, usually in the process of a privatization of a government-owned company, especially if the company operates in a strategic sector of the economy (e.g., the United Kingdom has a Golden Share in defense company BAE Systems, and France has a Golden Share in defense company Thales). Golden Shares in CFIUS practice and the U.S. generally are rare.
The Golden Share issued by U. S. Steel gives the U.S. government the right to appoint and remove one independent director and consent rights on specific matters. The Golden Share allows the U.S. government to block:
- reductions in committed capital investments under the NSA
- changing U. S. Steel's name or headquarters
- redomiciling U. S. Steel outside of the U.S.
- transferring production or jobs outside of the U.S.
- material acquisitions of competing U.S. businesses
- certain decisions on the closure or idling of existing U.S. manufacturing facilities, trade, labor and sourcing outside of the U.S.
The Golden Share is nontransferable and does not give the U.S. government any other voting rights, nor the right to receive dividends.
Issuance of a Golden Share binds the U.S. government to U. S. Steel for the foreseeable future and introduces a rarely used tool into the U.S. government's array of mitigation terms available to clear transactions. The Golden Share approach also is in tension with President Trump's America First Investment Policy, which instructs CFIUS to cease the use of overly bureaucratic, complex and open-ended mitigation agreements. Whether Golden Shares will remain an anomaly or become a trend is uncertain, but cross-border dealmakers should closely monitor developments.
The commitment of $11 billion in new investment also stands out. It is not clear whether Nippon Steel offered it or the U.S. government requested it as part of the NSA negotiations; however, it fits with one of the key tenets of the Trump Administration's philosophy that "economic security is national security."
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
