Mergers, Acquisitions and Divestitures

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‘Golden Share’ in U.S. Steel Gives Trump Extraordinary Control

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Administration officials secured a deal that will give the president unusual influence over a private company, and could serve as a model for other deals.To save its takeover of U.S. Steel, Japan’s Nippon Steel agreed to an unusual arrangement, granting the White House a “golden share” that gives the government an extraordinary amount of influence over a U.S. company.New details of the agreement show that the structure would give President Trump and his successors a permanent stake in U.S. Steel, significant sway over its board and veto power over a wide array of company actions, an arrangement that could change the nature of foreign investment in the United States.The terms of the arrangement were hammered out in meetings that went late into the night on Wednesday and Thursday, according to two people familiar with the details.Representatives from Nippon Steel — which had been trying to acquire the struggling U.S. Steel since December 2023, but had been blocked by the Biden administration over national security concerns — came around to Mr. Trump’s desire to take a stake that would give the U.S. government significant control over the company’s actions.Nippon had argued that this influence should expire — perhaps after three or four years, the duration of the Trump administration. But in the meetings, which were held at the Commerce Department, Trump officials led by Commerce Secretary Howard Lutnick insisted that the golden share should last in perpetuity, the two people said.Under the terms of the national security pact, which the companies said they signed Friday, the U.S. government would retain a single share of preferred stock, called class G — as in gold. And U.S. Steel’s charter will list nearly a dozen activities the company cannot undertake without the approval of the American president or someone he designates in his stead.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Cleveland-Cliffs Signals a Possible New Bid for U.S. Steel

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    The company’s renewed interest comes after the Biden administration blocked Nippon Steel from acquiring the onetime American powerhouse.A possible new takeover bid for U.S. Steel emerged on Monday, teeing up more turmoil over the once-dominant company’s future after President Biden’s decision to block its acquisition by a Japanese company.Lourenco Goncalves, the chief executive of an American competitor, Cleveland-Cliffs, said his company had “an All-American solution to save the United States Steel Corporation,” stressing that acquiring U.S. Steel was a matter of “when,” not “if.” But he offered no details of the bidding plans.The renewed expression of interest from Cleveland-Cliffs comes less than two weeks after Mr. Biden blocked a $14 billion takeover of U.S. Steel by Nippon Steel, arguing that the sale posed a threat to national security. Cleveland-Cliffs tried to buy U.S. Steel in 2023, an offer that was rejected in favor of Nippon’s higher bid.CNBC reported on Monday morning that Cleveland-Cliffs would seek to take over U.S. Steel and sell off its subsidiary, Big River Steel, to Nucor, another American producer. But Mr. Goncalves, at a news conference later in the day, would not confirm any partnership with Nucor on a bid.U.S. Steel and Nucor did not immediately respond to requests for comment.Investors seemed pleased by the potential bid, sending shares of U.S. Steel up as much as 10 percent on Monday when CNBC reported the potential offer. Shares of U.S. Steel finished about 6 percent higher on Monday but are down 23 percent over the past year, including Monday’s spike.But the fate of Nippon’s proposed takeover remains in limbo. U.S. Steel and Nippon sued the United States government last week in the hopes of reviving their merger, accusing Mr. Biden and other senior administration officials of corrupting the review process for political gain and blocking the deal under false pretenses.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Why Mergers of Carmakers Like Honda and Nissan Often Falter

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    The Japanese companies are considering joining forces to survive in a rapidly changing auto industry, but auto history is filled with troubled and failed marriages.The Japanese automakers Honda and Nissan are discussing a possible merger, in a bid to share costs and help themselves compete in a fast-changing and increasingly competitive industry.But a merger, even of two companies from the same country, is no guarantee of success, and the history of automotive deals is littered with failures and disappointments.Combining two large, global manufacturing operations is an incredibly difficult feat that involves reconciling different technologies, models and approaches to doing business. A merger’s success rests on getting ambitious managers and engineers who have spent decades competing with one another to cooperate. Teams and projects have to be scrapped or changed, and executives must cede power to others. In some cases, the merging companies are hamstrung by elected leaders who force them to keep operating money-losing factories.Thomas Stallkamp, an automotive consultant based in Michigan, was involved in the struggles of one of the biggest auto mergers, the 1998 merger of Chrysler and the German company Daimler. Mr. Stallkamp spent years in senior roles at Chrysler and DaimlerChrysler.“Car companies are big, complicated organizations, with large engineering staffs, manufacturing plants all over the world, hundreds of thousands of employees, in a capital-intensive business,” Mr. Stallkamp said. “You try to put two of them together and you run into a lot of egos and infighting, so it’s very, very difficult to make it work.”Honda and Nissan announced plans this year to work together on electric vehicles, and on Monday they formally began talks about extending that cooperation to a merger that could also include Mitsubishi Motors, a smaller manufacturer that works closely with Nissan. A pairing would unite Japan’s second- and third-biggest automakers, after Toyota, and create a company that would be the third largest in the world by number of cars produced, after Toyota and Volkswagen.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Biden Expected to Block U.S. Steel Takeover by Nippon

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    The Committee on Foreign Investment in the United States is expected to raise national security concerns about selling the iconic steel producer to Japan’s Nippon Steel.President Biden is preparing to soon block an attempt by Japan’s Nippon Steel to buy U.S. Steel on national security grounds, according to three people familiar with the matter, likely sinking a merger that became entangled in election-year politics in the United States.A decision to block the takeover would come after months of wrangling among lawmakers, business leaders and labor officials over whether a corporate acquisition by a company based in Japan — a key U.S. ally — could pose a threat to national security. A move by Mr. Biden to block the deal on those grounds could roil relations between the two nations at a moment when the United States has been trying to deepen ties with Japan amid China’s growing influence in East Asia.For months, the Committee on Foreign Investment in the United States, or CFIUS, has been scrutinizing the deal over potential risks. There has been mounting speculation that the Biden administration could intervene before the November election.A White House official told The New York Times that CFIUS “hasn’t transmitted a recommendation to the president, and that’s the next step in this process.”CFIUS is made up of members of the State, Defense, Justice, Commerce, Energy and Homeland Security Departments, and is led by the Treasury secretary, Janet L. Yellen.The committee sent a letter to U.S. Steel in recent weeks saying that it had found national security concerns with the transaction, one of the people familiar with the situation said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Kroger and Albertsons Confront a Skeptical F.T.C. in federal court

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    The Federal Trade Commission, which is trying to block Kroger’s plan to acquire Albertsons, said in court that the merger of grocery giants would also hurt workers’ pay and benefits.A trial that could determine whether the two largest supermarket chains in the United States can merge opened in Portland, Ore., on Monday, pitting the grocery giant Kroger against regulators who argue that its takeover of Albertsons would eliminate competition at the expense of consumers and workers.Before Judge Adrienne Nelson of U.S. District Court, the Federal Trade Commission and the supermarket chains laid out their arguments in court for the first time, as union representatives and workers protested the deal on the courthouse steps. Less competition, the agency’s lawyers said, would give Kroger more leverage to raise prices on millions of consumers.The highly anticipated proceedings, set to last three weeks, come as high food prices have become a critical focus in the presidential race. Vice President Kamala Harris, the Democratic presidential nominee, has backed a federal ban on price-gouging in the food and grocery industries to combat high grocery costs.Kroger and Albertsons defended the $24.6 billion deal, which would be the biggest supermarket merger in U.S. history, saying it would bolster their leverage with suppliers and improve competition against major retailers like Costco, Amazon and Walmart. But the F.T.C. — backed by a chorus of unions, consumer advocates, politicians and independent grocery chains — reiterated its position that the merger would probably result in higher prices for groceries and worse conditions for workers.The deal “would eliminate the competition that shoppers and workers depend on in one fell swoop,” Susan Musser, the F.T.C.’s chief trial counsel, said in her opening statement. “This lawsuit is part of an effort aimed at helping Americans feed their families.”In bringing the case, the F.T.C. has been joined by the attorneys general of eight states, including California and Illinois, as well as the District of Columbia. It’s part of a regulatory push under the Biden administration to rein in corporate consolidation in an array of industries, including airlines, Big Tech, book publishing and pharmaceuticals.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    The Trustbuster Who Has Apple and Google in His Sights

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    Shortly after Jonathan Kanter took over the Justice Department’s antitrust division in November 2021, the agency secured an additional $50 million to investigate monopolies, bust criminal cartels and block mergers.To celebrate, Mr. Kanter bought a prop of a giant check, placed it outside his office and wrote on the check’s memo line: “Break ’Em Up.”Mr. Kanter, 50, has pushed that philosophy ever since, becoming a lead architect of the most significant effort in decades to fight the concentration of power in corporate America. On Thursday, he took his biggest swing when the Justice Department filed an antitrust lawsuit against Apple. In the 88-page lawsuit, the government argued that Apple had violated antitrust laws with practices intended to keep customers reliant on its iPhones and less likely to switch to competing devices.That lawsuit joins two Justice Department antitrust cases against Google that argue the company illegally shored up monopolies. Mr. Kanter’s staff has also challenged numerous corporate mergers, including suing to stop JetBlue Airways from buying Spirit Airlines.“We want to help real people by making sure that our antitrust laws work for workers, work for consumers, work for entrepreneurs and work to protect our democratic values,” Mr. Kanter said in a January interview. He declined to comment on the Google cases and other active litigation.At a news conference about the Apple lawsuit on Thursday, Mr. Kanter compared the action to past Justice Department challenges to Standard Oil, AT&T and Microsoft. The suit is aimed at protecting “the market for the innovations that we can’t yet perceive,” he said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    An Emboldened F.T.C. Bolsters Biden’s Efforts to Address Inflation

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    With few unilateral options and little hope of legislation from Congress, the president’s early investment in competition policy could pay a political dividend.An independent federal agency has become one of the most reliable executors of President Biden’s attempts to fight inflation, at a time when the White House has few weapons of its own to quickly bring down stubbornly high prices of consumer staples like groceries.The Federal Trade Commission filed a lawsuit on Monday, joined by several state attorneys general, to challenge a merger between the supermarket giants Kroger and Albertsons. The agency’s rationale in many ways echoed Mr. Biden’s renewed attempts to blame corporate greed for rising prices and shrinking portions in grocery aisles.“If allowed, this merger would substantially lessen competition, likely resulting in Americans paying millions of dollars more for food and other essential household goods,” agency officials wrote in a legal complaint. Because grocery prices have risen significantly in recent years, they added, “the stakes for Americans are exceptionally high.”That is true for consumers, and it is true for the president. More Americans disapprove of his handling of the economy than approve of it. Consumer confidence, while improved in recent months, remains relatively weak for an economy with low unemployment and solid growth like the one Mr. Biden is presiding over.An internal analysis by White House economists suggests that no single factor is weighing more on consumer sentiment than grocery prices. Those costs soared in 2022 and have not fallen, though their rate of increase has slowed.White House officials concede that there is little more Mr. Biden can do unilaterally to reduce grocery prices and even less chance of legislative help from Congress. That is why Mr. Biden has resorted to the bully pulpit, calling on stores to reduce prices and chastising snack makers for engaging in “shrinkflation” — reducing portions while raising or maintaining prices.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Private Equity Is Starting to Share With Workers, Without Taking a Financial Hit

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    In 2018, Anna-Lisa Miller was working with agricultural cooperatives in Hawaii, helping them reinvest in their communities through shared ownership.Ms. Miller, who had gone to law school and had planned to do civil rights litigation, loved the principle of workers partaking in the financial success of their employers, and the next year joined Project Equity, a nonprofit that helps small businesses transition to worker ownership. But it was slow going, with each transaction requiring customized assistance.Then she came across an investor presentation from a different universe: KKR, one of the world’s largest private equity firms. In it, a KKR executive, Pete Stavros, discussed a model he had been developing to provide employees with an equity stake in companies it purchased, so the workers would reap some benefits if it was flipped for a profit. When all goes according to plan, KKR doesn’t give up a penny of profit, since newly motivated workers benefit the company’s bottom line, elevating the eventual sale price by more than what KKR gives up.In 2021, the two met up to talk about the idea. By that time, Mr. Stavros had decided to start an organization to promote his model more broadly, hoping to reach the 12 million people who work for companies that private equity firms own. Ms. Miller saw it as a way to move much faster.“Me, as Anna-Lisa working at Project Equity — zero ability to influence private equity in any way — I thought, ‘Oh, gosh, maybe this could be a really efficient scale lever,’” Ms. Miller said. “And here’s Pete, not only doing it but wanting to start this nonprofit.”A few months later, she was the founding executive director of the new group, Ownership Works. The organization now has 25 employees working in a sleek New York office space a couple of blocks from KKR’s soaring headquarters at Hudson Yards. A couple of dozen private equity firms have signed on to give the idea a try.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    U.S. Steel Acquisition Proposal Tests Biden’s Industrial Policy

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    The president is under pressure from Democrats and Republicans to block the sale to Japan’s Nippon Steel, which could upset a key foreign ally.U.S. Steel is an iconic example of the lost manufacturing muscle that President Biden says his economic policies will bring back to the United States.But last month, the storied-but-diminished company announced plans to be acquired by a Japanese competitor. That development has put Mr. Biden in an awkward bind as he tries to balance attempts to revitalize the nation’s industrial sector with his efforts to rebuild international alliances.Mr. Biden’s administration has expressed some discomfort with the deal and is reviewing the proposed $14.1 billion takeover bid by Japan’s Nippon Steel. The company is offering a hefty premium for U.S. Steel, which has struggled to compete against a flood of cheap foreign metal and has been weighing takeover offers for several months.The proposal has quickly become a high-profile example of the difficult political choices Mr. Biden faces in his zeal to revive American industry, one that could test the degree to which he is willing to flex presidential power in pursuit of what is arguably his primary economic goal: the creation and retention of high-paying union manufacturing jobs in the United States.Mr. Biden is under pressure from the United Steelworkers union and populist senators from both parties, including Democrats defending crucial swing seats in Ohio and Pennsylvania this fall, to nix the sale on national security grounds. The senators contend that domestically owned steel production is critical to U.S. manufacturing and supply chains. They have warned that a foreign owner could be more likely to move U.S. Steel jobs and production overseas.“This really should be a no-brainer,” Senator Josh Hawley, Republican of Missouri, said in an interview last week. “I don’t know why it would be difficult to say, my gosh, we’ve got to maintain steel production in this country, and particularly a company like this one, where you have thousands of workers in good union jobs.”U.S. Steel executives say the deal would benefit workers and give the merged companies “world-leading capabilities” in steel production. They announced last month that Nippon Steel had agreed to keep the company’s headquarters in Pittsburgh and to honor the four-year collective bargaining agreement that the steelworkers’ union ratified in December 2022.Other supporters of the takeover bid say blocking the sale risks angering a key American ally. Mr. Biden has courted Japanese collaboration on a wide range of issues, including efforts to counter Chinese manufacturing in clean energy and other emerging technologies, and welcomed Japanese investment in new American manufacturing facilities including for advanced batteries.Wilbur Ross, a former steel company executive who served as commerce secretary under President Donald J. Trump, wrote last week in The Wall Street Journal that there is “nothing in the deal from which the U.S. needs defending. Attacks by Washington pols only create unnecessary geopolitical tensions, and those, not the acquisition itself, could endanger American national security.”Adding to the cross-pressures on Mr. Biden: It is unclear what would happen to the 123-year-old U.S. Steel if the administration scuttles the deal and whether doing so would actually guarantee greater job security for the company’s nearly 15,000 North American employees.U.S. Steel executives say the deal with Nippon Steel would benefit workers, but skeptics of the deal are urging President Biden to review it to prevent lost steel production and jobs.Lawrence Bryant/ReutersU.S. Steel has faced challenges for decades because of intensifying foreign competition, particularly from China, which has flooded the global market with cheap, state-subsidized steel. American presidents have spent years trying to bolster and protect domestic steel makers through a mix of subsidies, import restrictions and so-called Buy America requirements for government purchases.“No U.S. industry has benefited more from protection than the steel industry,” Scott Lincicome, a trade policy expert at the libertarian Cato Institute think tank, wrote in a 2017 research paper.In recent years, presidents have increased those protections further. Mr. Trump imposed tariffs on imported steel, including from Japan. Mr. Biden has partially rolled back those levies in an attempt to rebuild alliances. Mr. Biden also included strict Buy America provisions in sweeping new laws to invest in infrastructure, clean energy and other advanced manufacturing.Those efforts have not come close to bringing back the levels of domestic steel production that the United States enjoyed in the 1970s — or even of recent decades. Raw steel production reached higher levels under Presidents Bill Clinton, George W. Bush and Barack Obama than it has under Mr. Biden or Mr. Trump.Employment in the industry fell steadily in the 1990s and mid-2000s. In 2022, there were just over 83,000 workers in iron and steel mills in the United States, which was less than half the number from 1992.Senators including Sherrod Brown of Ohio and Bob Casey of Pennsylvania, both Democrats, and Mr. Hawley and J.D. Vance of Ohio, both Republicans, urged Mr. Biden to review the proposed U.S. Steel sale to guard against lost steel production and jobs. Mr. Brown cited Nippon Steel’s failure to notify or consult with union leaders ahead of making its bid for the company.“Tens of thousands of Americans, including many Ohioans, rely on this industry for good-paying, middle-class jobs,” he wrote in a letter to Mr. Biden last month. “These workers deserve to work for a company that invests in its employees and not only honors their right to join a union, but respects and collaborates with its work force.”The calls for an administrative review of the deal largely focused on the Committee on Foreign Investment in the United States, which is known as CFIUS and headed by Janet L. Yellen, the Treasury secretary. The committee scrutinizes possible sales of American firms to foreign ones for possible national security threats, then issues recommendations to the president, who can suspend or block a deal.Shortly before Christmas, Mr. Biden appeared to grant the request for review, while stopping short of saying he would block it.Lael Brainard, who chairs the White House National Economic Council, said in a news release that Mr. Biden welcomed foreign investment in American manufacturing but “believes the purchase of this iconic American-owned company by a foreign entity — even one from a close ally — appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability.”The administration, Ms. Brainard said, “will be ready to look carefully at the findings of any such investigation and to act if appropriate.”Steelworkers cheered the move. David McCall, president of United Steelworkers International, said in a statement that Mr. Biden was “demonstrating once again the president’s unwavering commitment to domestic workers and industries.”Independent experts say it would be well within historical norms for the committee to evaluate the sale. That will likely include a detailed economic analysis of whether the deal could lead to diminished steel production capacity in the United States, said Emily Kilcrease, a CFIUS expert and senior fellow at the Center for a New American Security.But Ms. Kilcrease said that based on the committee’s past decisions, she expected the review to stop well short of a recommendation to kill the sale. Instead, she said, CFIUS might require an agreement from Nippon Steel to maintain certain levels of U.S. employment or production as a condition of the sale’s going through.“I would be shocked if this deal got blocked,” she said.Mr. Hawley said the choice was ultimately Mr. Biden’s — and a test of his commitment to the industry.“If the administration wants to block the sale, they absolutely have grounds to do it and the legal authority,” he said. “So it’s just a question of, do they want to? And will they have the guts to do it?” More