A new chapter in the US Steel-Nippon Steel acquisition saga has unfolded with the entrance of asset manager Ancora Holdings Group.
The firm, which manages $10 billion in assets, has taken a 0.18% stake in US Steel and aims to prevent Nippon Steel’s takeover of the American steel giant. Ancora is not only seeking to halt the acquisition but is also calling for leadership changes at US Steel, including the removal of CEO David Burritt and a new slate of directors.
Ancora’s primary grievance is that US Steel’s current leadership appears to be prioritizing a deal with Nippon Steel due to personal financial incentives. The asset manager claims that Burritt and the board stand to receive more than $100 million if the acquisition proceeds, potentially at the expense of US Steel shareholders. In an open letter issued on Monday, Ancora argued that US Steel is facing significant financial struggles, including excessive capital spending, high debt, and soft earnings, and that a sale to Nippon Steel should not be the company’s primary focus.
While the Biden administration blocked the $14 billion deal earlier this month, citing national security concerns, the deal is not yet dead. The deadline for unwinding the acquisition was extended, and both US Steel and Nippon Steel have challenged Biden’s decision through a federal lawsuit. Ancora, in its pursuit of change at US Steel, is also seeking to replace the board with independent members who are opposed to the Nippon deal. Notably, Ancora has nominated nine new candidates for the board, including Alan Kestenbaum, the former CEO of Stelco, a Canadian steel company. If these nominees are elected, Ancora plans to focus on a turnaround plan for US Steel instead of pursuing a foreign takeover.
The future of the proposed merger has been complicated by opposition from various parties. Former President Donald Trump has voiced his disapproval, aligning with labor unions like the United Steelworkers, who argue that a sale to Nippon Steel would harm American workers. Meanwhile, US Steel continues to support its deal with Nippon Steel, insisting that the partnership would bring significant investments and technological benefits to the American steel industry, while preserving jobs and keeping US Steel’s operations based in Pittsburgh.
Ancora’s latest move in the saga adds another layer of complexity, as the asset manager is not seeking to sell US Steel to another buyer but instead advocates for restructuring the company’s operations and leadership. US Steel, for its part, has dismissed Ancora’s proposals, arguing that the firm’s interests do not align with those of all shareholders, and raising concerns about Ancora’s past involvement with Cleveland-Cliffs, a competitor that had also sought to acquire US Steel in 2023.
The ongoing legal battles and corporate maneuvers suggest that the future of US Steel remains uncertain. While US Steel’s board remains committed to its alliance with Nippon Steel, Ancora’s challenge and the broader opposition to the deal indicate that the American steelmaker may face significant hurdles as it navigates the coming months. The next significant milestone in the saga will be the US Steel shareholders’ meeting in 2025, where votes will determine the composition of the board and potentially shape the future direction of the company.
The Wall Street Journal, the Associated Press, and United States Steel Corporation contributed to this report.
