US Steel's merger with Nippon Steel challenged by activist investor
What's the story
Activist investor Ancora Holdings Group has launched a proxy battle against US Steel. The firm has nominated nine candidates for US Steel's board, including Alan Kestenbaum, former CEO of Stelco Holdings Inc. Ancora is also pushing for Kestenbaum to replace US Steel's current CEO David Burritt. The move is part of Ancora's larger plan to stop US Steel's ongoing merger with Nippon Steel.
Strategy shift
Ancora urges US Steel to abandon merger-related litigation
Ancora is calling on US Steel to withdraw its lawsuit to salvage the Nippon Steel deal. Instead, the firm recommends that US Steel should seek a $565 million breakup fee. In a statement today, Ancora revealed that it has taken a "meaningful stake" in US Steel, without disclosing the exact size. The firm also questioned the legal basis of the litigation filed by US Steel and Nippon Steel earlier this month.
Political hurdles
Merger with Nippon Steel faces political opposition
Just before his term ended, ex-President Joe Biden blocked the proposed $14.1 billion takeover of US Steel by Nippon Steel on national security grounds. Both companies have since filed lawsuits in a bid to save the merger. President Donald Trump, who also opposes the Japanese firm's takeover, has expressed his belief that tariffs will make US Steel "a much more profitable and valuable company."
Company response
US Steel remains confident despite Ancora's opposition
Reacting to Ancora's move, US Steel released a statement reiterating its confidence in its partnership with Nippon Steel. This comes after the company's shares fell 1.7% to $36.79 before regular trading began in New York today. In 2023, Cleveland-Cliffs Inc. and other steelmakers bid for US Steel in an auction but lost to Nippon Steel.