What is a "golden share"?

Summary

Marketplace Morning Report: What is a "Golden Share"?

Release Date: May 28, 2025
Host: David Brancaccio, Marketplace

In this episode of the Marketplace Morning Report, host David Brancaccio delves into the intricate concept of a "golden share" amidst significant developments in the U.S. steel industry and offshore wind projects. The episode, spanning various economic and business topics, provides listeners with a comprehensive overview of recent events, expert insights, and market implications.

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1. Offshore Wind Projects and Policy Shifts

The episode opens with a discussion on the Empire Wind project, a major offshore wind initiative off the coast of New York. Initially halted by the Trump administration due to policy concerns, construction received a green light last week, signaling a revival for the offshore wind sector.

Key Insights:

• Gordon Vidal, CEO of Sea Services, emphasizes the positive momentum:
  “Literally this morning we just got another contract, so things are looking good.” [01:42]

• Vidal’s company plays a crucial role in safeguarding undersea infrastructure during offshore wind construction:
  “We provide safety vessels to make sure the assets are protected.” [01:53]

Despite the project's revival, Vidal expresses uncertainty about future investments:
“After these projects, there's probably going to be a lull because all the policy whiplash could chill new investment.” [02:10]

Challenges Highlighted:

• Energy Policy Instability: The fluctuating stance of the federal government, illustrated by President Trump's executive order halting offshore wind despite declaring an energy emergency, creates an unpredictable environment for investors.

• Potential Loss of Federal Tax Credits: Oliver Metcalfe, head of wind energy research at Bloomberg NEF, warns that the Republican budget bill might eliminate federal tax credits for offshore wind, complicating economic viability:
  “If we see the end of tax credits, then making the economic case for any future projects would be very, very difficult.” [03:10]

• Impact on Domestic Manufacturing: Chris Olath from the Special Initiative on Offshore Wind underscores the threat to U.S. manufacturing, as unfavorable policies may drive supply chain and manufacturing operations overseas.

State-Level Commitment: Despite federal uncertainties, states, particularly in the Northeast, remain dedicated to offshore wind, focusing on expanding transmission infrastructure to support future projects:
“Someday down the line, the state will be ready to buy power from a new crop of offshore wind projects.” [03:32]

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2. Market Dynamics Amid Policy Changes

Transitioning to financial markets, the S&P 500 experienced a 2% uptick, sparking discussions about the potential easing of Trump-era tariff uncertainties. However, experts advise against complacency during the summer months.

Susan Schmidt, Portfolio Manager at Exchange Capital Resources, cautions investors:
“Absolutely no way you can take your eye off the ball or ignore the markets this summer because you don't know what news is going to come out of the administration.” [04:23]

She further explains that despite temporary positive news, such as delayed tariffs on Europe, volatility is expected to persist:
“We're seeing such aggressive swings in the market by statements that President Trump is making that investors know things are going to keep moving around.” [05:01]

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3. US Steel's Acquisition by Nippon Steel and the "Golden Share"

The core segment of the episode focuses on the potential acquisition of U.S. Steel by Japan's Nippon Steel and the intriguing introduction of a "golden share" by the U.S. government.

Overview of the Acquisition:

• Gordon Vidal elaborates on the "golden share" concept, highlighting its role in maintaining government oversight:
  “It's veto power over some company decisions, most likely. It's not clear at this point what exactly a golden share would entail in the case of US Steel, but it could limit the company's ability to move or shut down production if it goes forward.” [07:10]

• Nippon Steel's Proposal: The Japanese firm is reportedly set to acquire U.S. Steel at $55 per share, a significant premium over its current trading price. The deal includes:

  • Appointment of an American CEO
  • Majority of the board sourced from the U.S.

• Political Backing and Opposition: President Donald Trump supports the deal, marking a shift from his previous opposition alongside President Joe Biden last year. Pennsylvania Senator Dave McCormick adds that the golden share will ensure American leadership within the company.

Historical Context: Vidal draws parallels to the 2008 financial crisis when the U.S. government held a controlling stake in General Motors to stabilize the automaker. However, unlike the temporary GM stake, the golden share in U.S. Steel represents a more lasting governmental influence.

Labor Concerns: The United Steel Workers Union opposes the sale, urging the president to block the acquisition, reflecting tensions between labor interests and corporate consolidation.

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4. The Role and Implications of a "Golden Share"

A "golden share" is a special type of share that grants the holder veto power over certain corporate decisions, typically used by governments to retain control in privatized entities.

Implications for U.S. Steel:

• Government Oversight: The golden share would enable the U.S. government to influence major decisions within U.S. Steel, safeguarding national interests such as employment and industrial security.

• Operational Stability: By limiting the company's ability to make unilateral decisions like shutting down production, the golden share aims to ensure operational continuity and protect the workforce.

Economic and Strategic Considerations:

• Maintaining Domestic Operations: The golden share helps prevent potential outsourcing or downsizing that could arise from foreign ownership.

• Encouraging Investment: While providing oversight, the golden share can also instill confidence among investors that the company remains committed to U.S. manufacturing.

Challenges:

• Market Confidence: The unusual government involvement in a publicly traded company may raise concerns among investors about bureaucratic interference and long-term strategic directions.

• Precedent Setting: Establishing a golden share sets a precedent for future foreign acquisitions of key American industries, potentially leading to increased governmental roles in corporate governance.

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5. Additional Insights and Closing Remarks

Towards the end of the episode, the host briefly touches upon the fallibility of online search engines, citing an example where Microsoft Bing incorrectly labeled the Pittsburgh Steelers as the "Nippon Steelers," humorously highlighting the challenges of AI-driven search accuracy.

Closing Remarks: David Brancaccio wraps up the episode with a nod to the multifaceted nature of today's economic landscape, emphasizing the importance of staying informed amidst technological and political changes.

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Notable Quotes:

• Gordon Vidal [07:10]:
  “It's veto power over some company decisions, most likely. It's not clear at this point what exactly a golden share would entail in the case of US Steel, but it could limit the company's ability to move or shut down production if it goes forward.”

• Susan Schmidt [04:23]:
  “Absolutely no way you can take your eye off the ball or ignore the markets this summer because you don't know what news is going to come out of the administration.”

• Oliver Metcalfe [02:38]:
  “You're not quite sure what they're doing or why they're doing, or whether they're going to come after you next.”

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This episode of the Marketplace Morning Report provides a deep dive into the complexities surrounding foreign acquisitions in critical industries and the measures governments may take to retain strategic control. Through expert commentary and insightful analysis, listeners gain a nuanced understanding of the balance between fostering international investments and safeguarding national economic interests.

Transcript

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[Marketplace Host]

From all of us at Marketplace. Thank you to everyone who stepped up during our May fundraiser. We're so grateful. Now more than ever. The support of our Marketplace investors means so much. Your generosity keeps this work going. We made great progress toward our goal, but ultimately fell a little short. Every donation matters, especially as we plan for an uncertain future for public media. If you didn't get a chance to we need you now. Head to marketplace.org donate and again, thank you in a few minutes. How to keep some of the US In US Steel if the big Japanese steel company goes ahead and buys it I'm David Brancaccio in New York. First weeks after halting construction on a major wind power project off the coast of New York, the Trump administration reversed course last week and allowed the Empire Wind project to proceed. It's a piece of good news for an industry that had been hit by high financing costs. But then there's the budget bill in Congress. Daniel Ackerman reports.

[Daniel Ackerman]

One person who's happy that Empire Wind is back under construction is Gordon Vidal.

[Gordon Vidal]

Literally this morning we just got another contract, so things are looking good.

[Daniel Ackerman]

Vidal's company, Sea Services, helps ensure that offshore wind construction doesn't damage undersea cables or other infrastructure.

[Gordon Vidal]

We provide safety vessels to make sure the assets are protected.

[Daniel Ackerman]

And while Vidal is glad to work on the $5 billion Empire Wind project, expected to power half a million homes, he's less confident about what comes next.

[Gordon Vidal]

After these projects, there's probably going to.

[Daniel Ackerman]

Be a lull because all the policy whiplash, he says could chill new investment. President Trump signed an executive order aimed at halting offshore wind, even as he declared the country to be in an energy emergency. David Victor, an energy researcher at UC San Diego, says offshore wind projects already take years to plan and finance, and the federal government's stance isn't helping.

[Oliver Metcalfe]

You're not quite sure what they're doing or why they're doing, or whether they're going to come after you next.

[Daniel Ackerman]

The Republican budget bill could also eliminate federal tax credits for offshore wind, says Oliver Metcalfe head of wind energy research@Bloomberg NEF.

[Marketplace Host]

If we see the end of tax.

[Gordon Vidal]

Credits, then making the economic case for.

[Susan Schmidt]

Any future projects would be very, very difficult.

[Daniel Ackerman]

And this could put a dent in domestic manufacturing, too. Chris Olath heads the think tank Special Initiative on Offshore Wind, and she says companies had announced plans to build equipment here in the US including underwater transmission cables. Now, though, the policies of the Trump.

[Marketplace Host]

Administration are actually pushing these supply chain and manufacturing companies to other countries.

[Daniel Ackerman]

But Olath says states remain committed to offshore wind, especially in the Northeast where demand for energy is high. But there's not much room for citing projects on land. ALICIA Janae Artessa is with the alliance for Clean Energy New York. And she says, yes, it's a three.

[WhatsApp Representative]

To four year delay from the federal level, but there is a lot of work to be done on the state side and so we can work on building out our transmission infrastructure so that.

[Daniel Ackerman]

Someday down the line, she says, the state will be ready to buy power from a new crop of offshore wind projects. I'm Daniel Ackerman for Marketplace.

[Marketplace Host]

After the s and P500 went up 2% yesterday, the talk among market participants is a sense perhaps unfounded in reality, but a sense that the big Trump tariff shocks are now behind us. This after sudden new tariffs on Europe were quickly delayed for some weeks. With Memorial Day behind us, is it time to relax for the summer and set portfolios on cruise control until Labor Day? The expression on markets is sell in May and go away. I don't think so. Susan Schmidt is portfolio manager at Exchange Capital Resources.

[Susan Schmidt]

Absolutely no way you can take your eye off the ball or ignore the markets this summer because you don't know what news is going to come out of the administration. So investors, while they're reacting very positively this week to news that we're delaying tariffs to Europe and that there might be a solution? It's not gonna reduce their attention to the market this summer because too much can still change and that volatility is going to continue.

[Marketplace Host]

Yeah, I mean, Truth Social is still there and the president of the United States likes to use it in the middle of the night. And anyone who's going to go off to the Hamptons in eastern Long island thinking they can turn off the news in the investment business is fooling themselves.

[Susan Schmidt]

Absolutely. They just can't leave. We're seeing such aggressive swings in the market by statements that President Trump is making that investors know things are going to keep moving around. Despite the euphoria this week that it may be behind us. It's really wishful thinking. Most investors realize that this is going to continue throughout the summer. They're going to need to stay alert to figure out what's happening in the market.

[Marketplace Host]

Yeah, think Susan Schmidt, Portfolio manager at Exchange Capital Resources. She's based in Chicago. Thank you, thank you.

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[Oliver Metcalfe]

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[Marketplace Host]

US steel to the Japanese firm Nippon Steel appears close, and it's expected to give an unusual role to the US Government. Multiple news outlets are reporting the United States may receive what's being styled as a golden share in U.S. steel Marketplace's Henry Epp is following this golden share business.

[Gordon Vidal]

It's veto power over some company decisions, most likely. It's not clear at this point what exactly a golden share would entail in the case of US Steel, but it could limit the company's ability to move or shut down production if it goes forward. This would be an unusual setup, at least for the U.S. it's rare for the federal government to have a position like this in a publicly traded company, but it has happened before. One example is the government's controlling stake in General Motors in exchange for bailing out the company during the 2008 financial crisis. That was not a permanent position, though. The government sold off the last of its GM shares in 2013.

[Marketplace Host]

Henry, we've been talking about Nippon Steel maybe buying U.S. steel for, I think it's over a year. What else do we know about the emerging deal?

[Gordon Vidal]

Yeah, Nippon is reportedly in line to buy U.S. steel for $55 per share. It's been trading well below that level, but its share Price jumped yesterday. U.S. steel is headquartered in Pittsburgh, and Pennsylvania Senator Dave McCormick told CNBC that in addition to that so called golden share, the company would have an American CEO. Majority of its board would be from the US President Donald Trump has thrown his support behind this deal, which is a reversal from last year when he joined then President Joe Biden in opposing the takeover. Trump is set to hold an event at U.S. steel in Pittsburgh on Friday. The United Steel Workers Union has long opposed selling U.S. steel to Nippon, and last week it urged the president to block the sale.

[Marketplace Host]

All right, and as a reminder not to trust the stuff you see at the top of online searches, often aided by artificial intelligence, Microsoft Bing is telling me here. I'm referring to the very first thing in bold at the top of the search. Return that quote. The Pittsburgh Steelers have been known by several names throughout history, including Nippon Steelers, unquote Baloney. Not true. Wrong. Now a search of Microsoft's copilot standalone AI didn't make the same ridiculous mistake, but this deck can save or ruin careers. In New York, I'm David Brancaccio Marketplace Morning Report from APM American Public Media.

[Daniel Ackerman]

This Old House has been America's most trusted source for all things DIY and home improvement for decades. And now we're on the radio and on demand.

[Gordon Vidal]

I think you're breaking into this wall.

[Marketplace Host]

Regardless. I was hoping you wouldn't say that. I need to go and get some whiskey.

[Daniel Ackerman]

I think I would get the whiskey for sure. Subscribe to this Old House Radio hour from LAS Studios. Wherever you get your podcasts.