The key to buying US Steel Corp. might be a golden share. Nippon Steel Corp. executives might feel it’s their Golden Ticket.
The share, which would give Washington veto rights on major decisions, is reported to be the key to getting the contentious, long-running $14.1 billion deal for US Steel over the finishing line, in a move that could be announced Friday.
That a bid vehemently opposed by two separate US presidents, and which looked dead in the water on more than one occasion, might now happen is a testament to Nippon Steel’s perseverance. But the Japanese firm may come to regret its generosity: The Golden Ticket of Charlie and the Chocolate Factory sounds nice until you recall what happened to the four others who accompanied him.
A buyout of such a quintessential American firm seemed a stretch when announced in December 2023, less than 12 months before the US presidential election. When both Joe Biden and Donald Trump came out in staunch opposition — perhaps the only issue they agreed on during the entire campaign — it looked like the Japanese firm had failed to do its homework. But with its aggressive lobbying, which included the hiring of former US Secretary of State Mike Pompeo as an adviser, the deal was kept on life support.
President Trump should also be praised for doing what his predecessor didn’t — back down from his initial opportunistic opposition. After the election, Biden doubled down with his decision to block the deal on spurious “national security” grounds despite getting the all-clear from the Committee on Foreign Investment in the United States. Trump, who once pledged to block the acquisition “instantaneously” if elected, eventually saw sense, or at least retreated — as is his wont.
The question is how much Nippon Steel is giving away for this newfound open-mindedness. Based on what’s been reported ahead of the announcement, it feels like too much. The purchase as initially agreed was already expensive: a 142% premium to the level shares traded at before US Steel effectively put itself up for sale; a whopping $565 million breakup fee, putting Nippon Steel on the line if Washington blocked it; and commitments to maintaining jobs and investing billions.
