Nippon Steel CEO says US golden share in US Steel won't limit management freedom

Nippon Steel's CEO stated on Thursday that the US government's golden share in US Steel will not impede the Japanese steelmaker from taking any management actions it deems appropriate.

Confirming the agreement to grant the US government unusual power to help conclude the 18-month acquisition battle, Eiji Hashimoto spoke at a Tokyo press conference, according to a Reuters report. 

The statement comes a day after Nippon Steel, Japan's leading steelmaker, finalised its $14.9 billion acquisition of US Steel.

The US government now holds a non-economic golden share and the president can appoint a board member in US Steel, due to the national security agreement signed with the Donald Trump administration.

"We won't be constrained in pursuing anything we aim to do," Hashimoto said, when asked how the golden share would influence management freedom.

He stated that Nippon Steel maintain sufficient managerial freedom, adding that the Japanese company had agreed to the US government's request to oversee the investment's execution and had put forth a golden share structure as a direct method to reflect this oversight.

To salvage the deal, the companies made an unusual concession, granting the US government an unprecedented level of control. This came after a difficult approval process, marked by significant political opposition.

Strategic vision and US investment

Hashimoto stated:

He also mentioned that the company plans to explore further global expansion.

The US government’s "golden share" in US Steel grants it veto power over several key decisions. These include relocating the company's Pittsburgh headquarters, transferring jobs internationally, changing the company name, or acquiring a rival business in the future.

"We have spent 2 trillion yen ($14 billion) to acquire US Steel…We have no intention of relocating its headquarters or shifting production or jobs overseas," Hashimoto said.

Under the terms of the agreement with the administration, Nippon Steel is obligated to invest approximately $11 billion in capital within the US by 2028.

Hashimoto stated that he saw no problem with the requirement, as the company planned to increase investments beyond its current scope. 

Future growth

He added that the Trump administration's policy change towards higher tariffs had elevated the strategic importance of the US Steel acquisition.

Hashimoto told reporters:

Nippon Steel's Vice Chairman, Takahiro Mori, who was the lead negotiator for the deal, stated that the company is evaluating various financing options, including a potential capital raise, to support its investment strategies in the US.

"The increased leverage from acquisition debt remains a clear credit negative," Roman Schorr, senior analyst at Moody's Ratings, was quoted in the report.