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Dealmakers are concerned that President Donald Trump has set a dangerous precedent for politically sensitive tie-ups by taking a “golden share” in US Steel as a condition for approving its takeover by Japan’s Nippon Steel.
US Steel’s announcement last week that it was giving the government the share cleared the way for the $14.9bn deal and ended 17 months of tense negotiations. The transaction had significant political implications due to US Steel’s historic role in American industry and its headquarters being located in the electoral swing state of Pennsylvania.
The “perpetual” golden share will give the US veto rights over decisions, including any delay to Nippon’s agreement to invest billions in the company, the closure of plants and certain changes to raw material sourcing, US commerce secretary Howard Lutnick said at the weekend. The agreement does not give the US an equity stake in the company.
“This is not about economics, this is about control,” said Stefan Selig, former US under secretary of commerce and ex-executive vice-chair for global investment banking at Bank of America. “To cede negative control to the US government, and a future government that they don’t know or have a good handle on, is a real accommodation that speaks to the importance they placed on getting this deal done.”
While M&A lawyers and bankers view the US Steel takeover as an unusual case, many expressed concern that the measure could represent a new modus operandi for the Trump administration in complex takeovers of US companies.
José Luis Vittor, partner of the Womble Bond Dickinson law firm, said international investors needed further details from the US government on how the golden share would be implemented and clarification about the possibility of similar structures in future deals.
“Regulations on this golden share ought to be only applied to this particular transaction and thoroughly reviewed to avoid the risk of misinterpretation by the foreign investment community that this could extend to other transactions,” he said.
While golden shares in the US are a rarity, several European countries, including the UK, France and Italy, have long relied on them in defence, telecoms and energy groups to maintain state influence even after they have been privatised.
However, an official close to the White House said the deal for US Steel was a “one-off” and that the “large majority” of foreign investments would not warrant a similar share class.
They added that few transactions reached the point of undergoing a review by the Committee on Foreign Investment in the US (Cfius), an inter-agency panel chaired by the Treasury that vets inbound investments for security risks, let alone the sort of scrutiny that US Steel’s takeover has endured.
Joe Biden, who was president when the deal was agreed in December 2023, had blocked it after Cfius suggested it could pose national security threats. However, the golden share and a pledge by Nippon to invest $11bn through 2028 and another $3bn in future years helped sway the Trump administration, according to a person close to the deal.
“Steel is the backbone of a modern economy and military,” White House spokesperson Kush Desai said in a statement. “The Trump administration is committed to ensuring that foreign business decisions do not undermine our national and economic security.”
Aaron Bartnick, a former Cfius official during the Biden administration, said that further deals resembling the one for US Steel would mark a “meaningful shift” in America’s approach to capital markets, after decades of criticising other nations for taking golden shares in national champions.
Still, Anthony Rapa, a Washington-based partner and co-chair of the international trade practice at Blank Rome, said it seemed “reasonably likely that the use of a ‘golden share’ mechanism will be reserved only for more sensitive or complex cases”.
But he cautioned that “it could be the case that the Trump Administration will make more use of this tool in order to drive outcomes consistent with its ‘America First’ investment policy”.
The White House’s use of a golden share has also prompted concerns among multinational companies that this adds another dimension of uncertainty to an already precarious dealmaking environment.
“The market is watching this,” said George Casey, global chair for corporate at Linklaters law firm. “Multinational companies that are contemplating investments in the US want to understand what future investments or acquisitions might look like, and how this feature will or will not impact their potential transactions.”
Others expressed concern for the future of Nippon. One shareholder said it could harm the company’s flexibility in decision-making and “set a bad precedent”. However, they acknowledged that the option of a golden share could facilitate more foreign investment in the US in sectors such as critical minerals and other areas of national interest.
Additional reporting by Alex Rogers in Washington and David Keohane in Tokyo
