An asset manager is seeking to quash Nippon Steel's takeover of U.S. Steel and oust the leadership of the U.S. steelmaker after taking a stake in the company.
Ancora Holdings Group reported acquiring a 0.18% stake in the Pittsburgh company and said Monday that the board of U.S. Steel and its CEO David Burritt have prioritized the sale to Nippon because they stand to receive more than $100 million if it goes forward.
Earlier this month Nippon Steel and U.S. Steel filed a federal lawsuit challenging a Biden administration decision to block Nippon’s proposed $15 billion acquisition citing national security.
Ancora is seeking an independent slate of directors at U.S. Steel and new CEO that are committed to walking away from the Nippon deal. In an open letter on Monday, the firm said it has nominated nine independent directors for election at U.S. Steel's annual shareholders meeting this year. Those directors have a plan that includes making Alan Kestenbaum, former Chairman and CEO of Stelco, the new CEO of U.S. Steel.
Ancora wants new board members to focus on U.S. Steel's turnaround, not trying to find alternative bidders or selling the company. It also wants them to pursue the $565 million breakup fee.
“U.S. Steel is now in a dire state due its excessive capital spending, high debt, soft earnings and nonexistent contingency plan,” Ancora wrote.
“There are consequences associated with having out-of-touch leadership with weak involvement in local communities. Absent a miracle, Ancora believes a substantial and urgent reconstitution of the company’s leadership is necessary,” it continued.
Ancora also said that President Donald Trump has opposed U.S. Steel's deal with Nippon and is unlikely to waver. Last month Trump vowed to block the transaction, pledging to use tax incentives and tariffs to strengthen the American steelmaker.
U.S. Steel, based in Pittsburgh, said early Monday that it remains committed to pursuing a deal with Nippon, believing it is the best deal for the U.S. steel industry, supply chains and job market.
It expressed concern over Ancora's plans.
“Ancora’s interests are not aligned with all U.S. Steel stockholders,” U.S. Steel said. “Our stockholders will not be well served by turning over control of the company to Ancora. We are also concerned about the motivations behind these nominations, given Ancora’s and Alan Kestenbaum’s recent dealings with failed bidder Cleveland-Cliffs.”
U.S. Steel rejected a bid from rival U.S. steelmaker Cleveland-Cliffs in favor of the offer from Nippon in 2023. Cleveland-Cliffs CEO Lourenco Goncalves said this month that he wanted to make a new bid for U.S. Steel.
Ancora is also based in Cleveland.
U.S. Steel has filed a lawsuit in the District Court for the Western District of Pennsylvania, accusing Cleveland-Cliffs and Goncalves, in coordination with David McCall, the head of the U.S. Steelworkers union, of “engaging in a coordinated series of anticompetitive and racketeering activities” to block its deal with Nippon.
