Activist investor Ancora Holdings Group is shaking up the steel industry by challenging Nippon Steel Corporation’s proposed acquisition of United States Steel Corp. Ancora has nominated nine new board members, including former Stelco Holdings Inc. CEO Alan Kestenbaum as a replacement for current US Steel CEO David Burritt. This bold move signals Ancora’s intent to derail the takeover and pursue alternative strategies for US Steel’s future.
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Ancora’s Strategy: Abandoning the Takeover
Ancora’s core strategy revolves around abandoning the Nippon Steel deal and capitalizing on the $565 million breakup fee. The firm argues that US Steel’s litigation to salvage the merger lacks legal precedent and is unlikely to succeed. Furthermore, Ancora contends that hopes of swaying President Trump to approve the deal are unrealistic.
This stance directly confronts the efforts of US Steel and Nippon Steel, who filed lawsuits after President Biden blocked the $14.1 billion takeover citing national security concerns. The legal battle and Ancora’s intervention highlight the complex political and economic factors at play in this high-stakes corporate acquisition. President Trump’s public opposition to the deal, coupled with his pronouncements on tariffs bolstering US Steel’s profitability, further complicates the situation.
Alt: A large-scale steel mill, representing the industrial heart of US Steel’s operations.
Building a Stake and Seeking Alternatives
Ancora is actively acquiring a significant stake in US Steel, with Kestenbaum also planning to invest. While Ancora’s current holding is relatively small (0.18%), their commitment underscores their determination to influence US Steel’s direction. This move follows a previous auction for US Steel in 2023 where Nippon Steel outbid other contenders, including Cleveland-Cliffs Inc. Currently, Cleveland-Cliffs and Nucor Corp. are reportedly considering a joint bid for US Steel, adding another layer of complexity to the unfolding drama.
Kestenbaum’s prior success in leading Stelco’s turnaround after acquiring it from US Steel out of bankruptcy adds significant weight to Ancora’s proposal. His experience and successful track record in the steel industry position him as a credible alternative to the current leadership and potentially a driving force in revitalizing US Steel. The recent acquisition of Stelco by Cleveland-Cliffs for approximately $2.7 billion further underscores the dynamic nature of the North American steel market.
Alt: A portrait of Alan Kestenbaum, former CEO of Stelco Holdings Inc., and Ancora’s nominee for US Steel CEO.
Ancora’s Track Record of Activism
Ancora, led by Jim Chadwick, has a history of successful activist campaigns within industrial and transportation companies. Their track record includes securing board seats at Berry Global Group Inc. and Norfolk Southern Corp., demonstrating their ability to influence corporate governance and strategic direction. The firm’s 2024 victory in gaining three board seats at Norfolk Southern highlights their persistence and effectiveness in pursuing their objectives.
Conclusion: A Pivotal Moment for US Steel
Ancora’s intervention marks a critical juncture for US Steel. The firm’s aggressive strategy to block the Nippon Steel takeover and install new leadership presents a significant challenge to the status quo. The outcome of this battle will have profound implications for US Steel’s future, the broader steel industry, and the ongoing debate surrounding international mergers and national security concerns. The unfolding events will be closely watched by investors, industry analysts, and policymakers alike.
