According to reports from Japanese media cited by Xinhua News Agency, Nippon Steel Corporation is considering offering the U.S. government a "golden share" with veto power over critical decisions to facilitate its acquisition of U.S. Steel Corporation.
Reports from Kyodo News and The Nikkei suggest that if negotiations with the U.S. government reach an impasse, Nippon Steel may propose the "golden share" arrangement. While such shares typically require minimal investment, Nippon Steel would still aim to hold close to 100% ownership of U.S. Steel. With a "golden share," the U.S. government would have the authority to veto board nominations or block foreign entities, other than Nippon Steel, from influencing U.S. Steel's operations.
Nippon Steel originally planned to acquire 100% of U.S. Steel shares and make it a wholly owned subsidiary. However, it remains unclear how much ownership U.S. President Donald Trump would authorize Nippon Steel to hold. On May 23, Trump posted on social media, hinting at a green light for the deal, describing it as a "planned partnership" between U.S. Steel and Nippon Steel. However, just two days later, on May 25, Trump stated that U.S. Steel would remain under American control, with Nippon Steel only serving as an investor holding partial ownership.
A "golden share" is a special type of stock that allows its holder to exercise veto power over critical corporate matters, even with minimal investment. However, this mechanism has drawbacks, as it could grant disproportionate power to the "golden share" holder, potentially disrupting corporate governance. In the U.S., publicly traded companies are generally not allowed to issue "golden shares."
Reports indicate that if the deal is approved, Nippon Steel plans to delist U.S. Steel after the acquisition, allowing the U.S. government to hold a "golden share." This potential arrangement reflects Nippon Steel's efforts to address U.S. concerns over foreign ownership while advancing its strategic acquisition of U.S. Steel.
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