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Investment Firm Seeks to End Nippon Steel Merger
01/27/2025 - A Cleveland investment firm has launched a proxy battle over United States Steel Corporation, arguing that the Nippon Steel merger should be abandoned and that its future should be as a stand-alone entity.
In a statement, Ancora said it has nominated a slate of nine directors who intend to replace chief executive officer David Burritt with Alan Kestenbaum, the former executive chairman of Stelco. Kestenbaum bought Stelco in 2017 and sold the business to Cleveland-Cliffs Inc. in 2024.
Ancora argues that the Nippon Steel sale is a dead end.
“There appears to be no legal basis and no precedent for U. S. Steel’s costly litigation over the presidential executive order blocking the transaction. Moreover, President Donald Trump is a vocal opponent of the deal and long-term proponent of strengthening America’s domestic manufacturing base,” the investment firm said in an open letter to the U. S. Steel board.
“We see no reason to believe that President Trump, a high-conviction businessman who was elected by middle-class and working-class voters, is going to contradict his self-described ‘America First’ agenda and disregard the opposition of the United Steelworkers.”
“Although U. S. 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,” it added.
The firm says that under new leadership, U. S. Steel should pursue a US$565 million breakup fee from Nippon and begin working to reinvigorate itself as a standalone company by implementing a multiyear plan that targets meaningful share price appreciation.
In response, U. S. Steel said it believes Ancora’s interests “are not aligned with all U. S. Steel stockholders.”
“We remain confident that our partnership with Nippon Steel is the best deal for American steel, American jobs, American communities and American supply chains,” U. S. Steel said. “With Nippon Steel, U. S. Steel remains an American company and its headquarters will stay in Pittsburgh, its iconic name will not change, and its products will remain mined, melted and made in America. U. S. Steel’s partnership with Nippon Steel is the only path that enables the necessary know-how, technology and investments to secure the future of U. S. Steel.”
Ancora argues that the Nippon Steel sale is a dead end.
“There appears to be no legal basis and no precedent for U. S. Steel’s costly litigation over the presidential executive order blocking the transaction. Moreover, President Donald Trump is a vocal opponent of the deal and long-term proponent of strengthening America’s domestic manufacturing base,” the investment firm said in an open letter to the U. S. Steel board.
“We see no reason to believe that President Trump, a high-conviction businessman who was elected by middle-class and working-class voters, is going to contradict his self-described ‘America First’ agenda and disregard the opposition of the United Steelworkers.”
“Although U. S. 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,” it added.
The firm says that under new leadership, U. S. Steel should pursue a US$565 million breakup fee from Nippon and begin working to reinvigorate itself as a standalone company by implementing a multiyear plan that targets meaningful share price appreciation.
In response, U. S. Steel said it believes Ancora’s interests “are not aligned with all U. S. Steel stockholders.”
“We remain confident that our partnership with Nippon Steel is the best deal for American steel, American jobs, American communities and American supply chains,” U. S. Steel said. “With Nippon Steel, U. S. Steel remains an American company and its headquarters will stay in Pittsburgh, its iconic name will not change, and its products will remain mined, melted and made in America. U. S. Steel’s partnership with Nippon Steel is the only path that enables the necessary know-how, technology and investments to secure the future of U. S. Steel.”
