Activist investor Ancora Holdings has acquired a stake in US Steel and is urging the steelmaker to abandon its merger agreement with Japan’s Nippon Steel, according to a Wall Street Journal report.
Ancora intends to encourage shareholders to remove US Steel’s CEO David Burritt, according to the report. The activist investor’s stake in US Steel is still unknown.
According to the WSJ, Ancora has nominated nine director candidates, including former Stelco chief Alan Kestenbaum, to the company’s 12-person board. Ancora is reportedly not interested in selling the American steelmaker to another party.
Bloomberg News reported that the hedge fund wants Kestenbaum to replace Burritt as CEO.
Nippon and US Steel deal
Earlier this month, former US President Joe Biden cited national security concerns to block Nippon Steel’s $14.9 billion acquisition of US Steel. The order also mandated that Nippon abandon the bid by June.
The Biden administration is being sued by the companies for preventing the acquisition.
Nippon Steel’s potential acquisition of US Steel was also opposed by the US President Donald Trump.
In December, Donald Trump expressed his strong opposition to the specific deal on a social media platform, stating resolutely, “I will block this deal from happening.”
This declaration highlights Trump’s intent to use his influence and authority to prevent the deal from reaching completion.
Other firms interested in US Steel
Earlier in January, Reuters reported that Cleveland-Cliffs, a competitor in the steel industry, was collaborating with another steelmaker, Nucor, to explore a potential all-cash offer to acquire US Steel.
This development suggests that US Steel may be a target for acquisition, with Cleveland-Cliffs and Nucor potentially emerging as key players in a potential bidding war.
Cliffs Natural Resources Inc. had previously expressed interest in acquiring US Steel Corporation, but the proposed deal was met with resistance from the company.
Antitrust concerns
The American steelmaker cited concerns over potential antitrust issues that could arise from the merger, as well as the impact on the US automotive industry due to the consolidation of steel supply.
A merger between the two companies could potentially lead to a scenario where up to 95% of US iron ore production would be controlled by a single entity.
This level of consolidation raises significant antitrust concerns, as it could grant the merged company substantial market power and the ability to influence prices and supply.
Additionally, US automakers, who rely heavily on domestic steel supply, expressed apprehension about the potential for reduced competition and increased costs that could result from the merger.
Ancora Holdings, known for its activist investor strategies, has previously targeted and pushed for changes within several other companies.
These include prominent names in the transportation and logistics sector, such as C.H. Robinson, a global provider of multimodal transportation services and logistics solutions.
Other companies include Norfolk Southern, a Class I freight railroad company operating in the eastern United States; and Forward Air Corporation, a freight and logistics company specializing in expedited less-than-truckload shipping.
Ancora’s involvement in these companies typically involves advocating for strategic shifts, operational improvements, or changes in corporate governance, often with the goal of enhancing shareholder value.
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