Corporate America's newest activist investor? US President Donald Trump

Lauren Hirsch & Maureen Farrell

 

Corporate America has built up defences against the likes of Carl Icahn, Nelson Peltz, and other corporate raiders who have rattled the cages of chief executives, pushing for higher stock prices. Now companies have a new investor to worry about: The president of the US.

 

President Donald Trump has inserted the government into US companies in extraordinary ways, including taking a stake in US Steel and pushing for a cut of Nvidia’s and Advanced Micro Devices’ revenue from China. Last month, the Pentagon said it was taking a 15 per cent stake in MP Materials, a large American miner of rare earths.

 

 

And on Friday, Intel agreed to allow the US government to take a 10 per cent stake in its business, worth $8.9 billion.

 

These developments could herald a shift from America’s vaunted free-market system to one that resembles, at least in some corners, a form of state-managed capitalism more frequently seen in Europe and, to a different degree, China and Russia, say lawyers, bankers and academics steeped in the history of hostile takeovers and international business.

 

And the actions are sending Wall Street’s bankers and lawyers scrambling to help companies come up with a playbook to defend against or least find ways to mollify Trump.

 

“Virtually every company I’ve talked to which is a regular recipient of subsidies or grants from the government is concerned about this right now,” Kai Liekefett, co-chairman of the corporate defense practice at the law firm Sidley Austin, said in an interview.

 

The Trump administration is casting a wide net, scouring other companies that it thinks could be ripe for some form of government involvement, three people briefed on these discussions said.

 

But experts say Trump’s push is different from — and more aggressive than — what the United States had seen before. The companies he is targeting are not on the cusp of collapse, nor would their demise, as in the case of the banks during the financial crisis, set off a chain of events that could lead to global economic ruin.

 

“America has always been wary about the line between public and private enterprise,” said Jonathan Levy, a historian and professor at Sciences Po in Paris and author of “Ages of American Capitalism: A History of the US.”