Activist investor Ancora Holdings Group has put forward nine candidates for the board of United States Steel Corp. and is advocating for the company to abandon its proposed acquisition by Nippon Steel Corp. Among the nominees is Alan Kestenbaum, the former CEO of Stelco Holdings Inc., whom Ancora aims to position as a replacement for current US Steel CEO David Burritt. Ancora is seeking to compel US Steel to terminate its legal efforts to salvage the Nippon Steel deal and instead pursue a $565 million breakup fee, as stated in a recent announcement. The firm claims to have acquired a “meaningful stake” in US Steel, though it has not disclosed the specific amount.
Ancora criticized the recent litigation initiated by US Steel and Nippon, stating, “There is no legal precedent for the litigation brought by U.S. Steel and Nippon earlier this month.” The firm also expressed skepticism about US Steel’s hopes of gaining approval for the deal from President Trump, calling it a “pipe dream.” Earlier this month, President Biden blocked Nippon Steel’s $14.1 billion takeover of US Steel on national security grounds, leading the companies to file lawsuits in a last-ditch effort to maintain the merger. Trump, who opposes the acquisition, has suggested that tariffs could enhance US Steel’s profitability and value.
In response to Ancora’s actions, US Steel reaffirmed its confidence in its partnership with Nippon Steel. Following this news, US Steel shares dropped 1.7% to $36.79 before regular trading commenced in New York. Cleveland-Cliffs Inc. was among several steelmakers that participated in an auction for US Steel in 2023 but was outbid by Nippon Steel. Cleveland-Cliffs is now collaborating with Nucor Corp. to consider a potential joint bid for US Steel.
Kestenbaum previously acquired Stelco from US Steel during its bankruptcy and successfully turned the company around following its initial public offering. After losing the bid for US Steel, Cleveland-Cliffs agreed to purchase Stelco for approximately C$3.85 billion ($2.7 billion) in July. Ancora has a history of campaigns targeting industrial and transportation companies, having secured board positions at Berry Global Group Inc. and Norfolk Southern Corp.
