US Steel Faces Proxy Fight as Activist Pushes to End Merger

(Bloomberg) -- Activist investor Ancora Holdings Group has nominated nine candidates for United States Steel Corp.’s board and is pushing for the company to abandon a takeover by Nippon Steel Corp.

The nominees include former Stelco Holdings Inc. Chief Executive Officer Alan Kestenbaum, who Ancora wants to also replace current US Steel CEO David Burritt.

Ancora intends to force US Steel to end litigation aimed at rescuing the Nippon Steel deal and instead collect a $565 million breakup fee, it said Monday in a statement.

“There is no legal precedent for the litigation brought by US Steel and Nippon earlier this month,” Ancora said. “Although US Steel seems to be holding out hope that it can convince President Trump to approve the deal, the facts indicate that this is a pipe dream.”

Before leaving office this month, President Joe Biden blocked Nippon Steel’s $14.1 billion takeover of US Steel on national security grounds. The companies subsequently filed a pair of lawsuits in a last-ditch effort to preserve the merger.

President Donald Trump, who also opposes the takeover by the Japanese company, has said on his social media platform, Truth Social, that tariffs will make US Steel “a much more profitable and valuable company.”

In response to reports of Ancora’s intentions, US Steel said in a statement that it remains confident in its partnership with Nippon Steel. US Steel shares were down 1.7% in early trading in New York in Monday, giving the company a market value of about $8.3 billion.

Ancora said it’s “in the process of amassing a meaningful stake” and that Kestenbaum also intends to invest in US Steel. Ancora has a holding of 0.18% in US Steel, according to the steelmaker’s statement on Monday.

Cleveland-Cliffs Inc. was among several steelmakers that participated in an auction for US Steel in 2023 before being outbid by Nippon Steel. Cleveland-Cliffs is now partnering with Nucor Corp. to weigh a potential joint bid for US Steel, Bloomberg News has reported.

Kestenbaum bought Stelco out of bankruptcy from US Steel and completed a turnaround of the company after an initial public offering. In July, after losing the bidding for US Steel, Cleveland-Cliffs agreed to buy Stelco for about C$3.85 billion ($2.7 billion).