President Donald Trump on Friday signed an executive order paving the way for a Nippon Steel investment in U.S. Steel, so long as the Japanese company complies with a “national security agreement” submitted by the federal government.
Trump’s order didn’t detail the terms of the national security agreement.
But the iconic American steelmaker and Nippon Steel said in a joint statement that the agreement stipulates that approximately $11 billion in new investments will be made by 2028 and includes giving the U.S. government a “golden share” — essentially veto power to ensure the country’s national security interests are protected against cutbacks in steel production.
“We thank President Trump and his Administration for their bold leadership and strong support for our historic partnership,” the two companies said. “This partnership will bring a massive investment that will support our communities and families for generations to come. We look forward to putting our commitments into action to make American steelmaking and manufacturing great again.”
The companies have completed a U.S. Department of Justice review and received all necessary regulatory approvals, the statement said.
“The partnership is expected to be finalized promptly,” the statement said.
U.S. Steel rose $2.66, or 5%, to $54.85 in afterhours trading Friday. Nippon Steel’s original bid to buy the Pittsburgh-based U.S. Steel in late 2023 had been valued at $55 per share.
The companies offered few details on how the golden share would work, what other provisions are in the national security agreement and how specifically the $11 billion would be spent.
White House spokesman Kush Desai said the order “ensures U.S. Steel will remain in the great Commonwealth of Pennsylvania, and be safeguarded as a critical element of America’s national and economic security.”
James Brower, a Morrison Foerster lawyer who represents clients in national security-related matters, said such agreements with the government typically are not disclosed to the public, particularly by the government.
They can become public, but it’s almost always disclosed by a party in the transaction, such as a company — like U.S. Steel — that is publicly held, Brower said.
The mechanics of how a golden share would work will depend on the national security agreement, but in such agreements it isn’t unusual to give the government approval rights over specific activities, Brower said.
U.S. Steel made no filing with the U.S. Securities and Exchange Commission on Friday.
Nippon Steel originally offered nearly $15 billion to purchase U.S. Steel in an acquisition that had been delayed on national security concerns starting during Joe Biden’s presidency.
As it sought to win over American officials, Nippon Steel gradually increased the amount of money it was pledging to invest into U.S. Steel. American officials now value the transaction at $28 billion, including the purchase bid and a new electric arc furnace — a more modern steel mill that melts down scrap — that they say Nippon Steel will build in the U.S. after 2028.
Nippon Steel had pledged to maintain U.S. Steel’s headquarters in Pittsburgh, put U.S. Steel under a board with a majority of American citizens and keep plants operating.
It also said it would protect the interests of U.S. Steel in trade matters and it wouldn’t import steel slabs that would compete with U.S. Steel’s blast furnaces in Pennsylvania and Indiana.
Trump opposed the purchase while campaigning for the White House, and using his authority Biden blocked the transaction on his way out of the White House. But Trump expressed openness to working out an arrangement once he returned to the White House in January.
Trump said Thursday that he would as president have “total control” of what U.S. Steel did as part of the investment.
Trump said then that the deal would preserve “51% ownership by Americans,” although Nippon Steel has never backed off its stated intention of buying and controlling U.S. Steel as a wholly owned subsidiary.
“We have a golden share, which I control,” Trump said.
Trump added that he was “a little concerned” about what presidents other than him would do with their golden share, “but that gives you total control.”
The proposed merger had been under review by the Committee on Foreign Investment in the United States, or CFIUS, during the Trump and Biden administrations.
The order signed Friday by Trump said the CFIUS review provided “credible evidence” that Nippon Steel “might take action that threatens to impair the national security of the United States,” but such risks might be “adequately mitigated” by approving the proposed national security agreement.
The order doesn’t detail the perceived national security risk and only provides a timeline for the national security agreement. The White House declined to provide details on the terms of the agreement.
The order said the draft agreement was submitted to U.S. Steel and Nippon Steel on Friday. The two companies must successfully execute the agreement as decided by the Treasury Department and other federal agencies that are part CFIUS by the closing date of the transaction.
Trump reserves the authority to issue further actions regarding the investment as part of the order he signed on Friday.
