Corporate America’s newest activist investor: Donald Trump

The president is demanding government stakes in US companies and cuts of their revenue. Experts see some similarities to state-managed capitalism in other parts of the world, write Lauren Hirsch and Maureen Farrell from New York

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

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. In July, the Pentagon said it was taking a 15% stake in MP Materials, a large American miner of rare earths.

‘And on Aug 22, Intel agreed to allow the US government to take a 10% 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-chair of the corporate defence 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.

The US government has inserted itself in corporate America before. The Obama administration took stakes in banks and auto companies after the 2008 financial crisis, and both the Obama and Biden administrations used government subsidies to promote green technology.