Nippon Steel and U.S. Steel Confirm Merger with National Security Provisions

On June 18, 2025, Nippon Steel Corporation, a leading Japanese steelmaker, and United States Steel Corporation (U.S. Steel) announced the finalization of their merger agreement, a significant development in the global steel industry. This announcement follows an executive order issued by President Donald Trump on June 13, 2025, which allowed the merger under specific national security conditions set forth by the Committee on Foreign Investment in the United States (CFIUS).

The finalized agreement comes after a complex negotiation process that began with Nippon Steel's initial acquisition proposal on December 18, 2023, valued at $14.9 billion. This proposal prompted a review by CFIUS, which concluded that the acquisition posed risks to U.S. national security. Consequently, President Joe Biden issued a prohibition on the transaction on January 3, 2025. However, following a change in administration, Nippon Steel modified its approach, seeking to invest in U.S. Steel without acquiring a controlling interest.

Key terms of the merger agreement include a commitment from Nippon Steel to invest approximately $11 billion in U.S. Steel by 2028, which will support both existing operations and new projects, including a greenfield investment slated for completion post-2028. According to Antonia I. Tzinova, a partner at Holland & Knight, the agreement stipulates that U.S. Steel will maintain its headquarters in Pittsburgh and that a majority of its board members will be U.S. citizens, ensuring significant American oversight in governance.

Another critical component of the agreement is the issuance of a 'Golden Share' to the U.S. government. This unique arrangement grants the government veto power over certain corporate decisions, such as changes in committed capital investments and the relocation of jobs outside the U.S. The Golden Share mechanism, though rare in U.S. corporate practice, reflects a growing trend toward increased government oversight in foreign investments, especially in strategic sectors. According to Dr. Sarah Johnson, a Professor of Economics at Harvard University, this move underscores a shift in U.S. policy towards protecting national interests in key industries.

The agreement has drawn mixed reactions. While some industry experts view the merger as a strategic partnership that could bolster the global competitiveness of both companies, others express concerns regarding the implications of foreign ownership in critical infrastructure. For instance, Robert A. Friedman, an industry analyst at the American Iron and Steel Institute, stated, "The merger could enhance production capabilities and innovation, but it also raises questions about long-term U.S. control over essential manufacturing sectors."

Looking ahead, the implications of this merger extend beyond the steel industry. The $11 billion investment could stimulate job creation and technological advancements within U.S. Steel, potentially setting a precedent for future foreign investments in critical sectors. However, the effectiveness of the Golden Share provision in ensuring compliance and safeguarding U.S. interests remains to be seen. As the global economy continues to evolve, the outcome of this merger will be closely monitored by policymakers and industry stakeholders alike.

For more detailed insights into the merger and its implications, stakeholders are encouraged to consult with legal experts or representatives from Holland & Knight's International Trade Group.