Nippon Steel and U.S. Steel finalize partnership, provide details of NSA

Nippon Steel (NPSCY) (NSPCY) and United States Steel (X) announced they have finalized their partnership. The companies have now completed the transaction as contemplated by their merger agreement. The companies have also entered into a National Security Agreement with the U.S Government, and U. S. Steel will issue a Golden Share to the U.S. Government. Under the NSA, the U.S. Government and the companies have agreed to measures to protect U.S. national security, including, among others, the following commitments by the companies: Nippon Steel will make approximately $11B in new investments in U. S. Steel by 2028, which includes an initial investment in a greenfield project that will be completed after 2028; U. S. Steel will remain a U.S.-incorporated entity and will maintain its headquarters in Pittsburgh, Pennsylvania; a majority of the members of U. S. Steel’s board of directors will be U.S. citizens; U.S. Steel’s key management personnel, including its CEO, will be U.S. citizens; U. S. Steel will maintain capacity to produce and supply steel from its U.S. production locations to meet market demand in the U.S. and Nippon Steel will not prevent, prohibit, or otherwise interfere with U. S. Steel’s ability to pursue trade action under U.S. law. Pursuant to the NSA and through the ownership of the Golden Share, the U.S. Government will have certain rights, including, among others: the right to appoint one independent director and consent rights of the president of the United States, or his designee, on specific matters, including: reductions in the committed capital investments under the NSA; changing U. S. Steel’s name and headquarters; redomiciling U. S. Steel outside of the United States; transfer of production or jobs outside of the United States; material acquisitions of competing businesses in the United States and certain decisions on closure or idling of U.S. Steel’s existing U.S. manufacturing facilities, trade, labor, and sourcing outside of the United States. This framework will enable Nippon Steel to secure management flexibility and profitability at U. S. Steel while protecting U.S. national security. With this partnership, the Nippon Steel Group’s annual crude steel production capacity is expected to reach 86M tons, bringing it closer to Nippon Steel’s global strategic goal of 100 million tons of global crude steel production capacity.