New player arrives in U.S. Steel-Nippon takeover saga with goal of quashing it

An asset manager is seeking to quash Nippon Steel’s takeover of U.S. Steel and oust the leadership of the U.S. steelmaker after taking a stake in the company.

Ancora Holdings Group, with $10 billion in assets, reported acquiring a 0.18% stake in the Pittsburgh company. It said Monday that U.S. Steel CEO David Burritt and the company’s board have prioritized a sale to Nippon because they stand to receive more than $100 million if it goes forward.

President Joe Biden blocked the nearly $15 billion acquisition this month—affirming an earlier vow to prevent the acquisition of Steeltown USA’s most storied steel company.

But the deal is not dead yet. The deadline to unwind the proposed takeover was extended by the Biden administration and U.S. Steel and Nippon challenged the Biden decision this month in a federal lawsuit.

Ancora is seeking an independent slate of directors at U.S. Steel and new CEO that are committed to walking away from the Nippon deal. In an open letter on Monday, the firm said it has nominated nine independent directors for election at U.S. Steel’s annual shareholders meeting this year. Those directors have a plan that includes making Alan Kestenbaum, a former steel executive, the new chief executive of U.S. Steel.

Ancora wants new board members to focus on U.S. Steel’s turnaround, not selling the company. It also wants them to pursue the $565 million breakup fee from Nippon.

“U.S. Steel is now in a dire state due its excessive capital spending, high debt, soft earnings and nonexistent contingency plan,” Ancora wrote.

The exit of the Biden administration does not necessarily improve the odds of the Nippon deal going through. President Donald Trump has consistently voiced opposition to the deal and questioned why U.S. Steel would sell itself to a foreign company given the regime of new tariffs he has vowed.

“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,” Ancora said Monday.

U.S. Steel said it remains committed to pursuing a deal with Nippon, believing it is best for the U.S. steel industry, supply chains and for steel workers.

It also raised earlier allegations that rival steelmaker Cleveland-Cliffs had attempted to sabotage its merger with Nippon. U.S. Steel filed a separate federal lawsuit against the Ohio steelmaker and its CEO Lourenco Goncalves, as well as David McCall, the head of the U.S. Steelworkers union, accusing them of “engaging in a coordinated series of anticompetitive and racketeering activities” to block the deal.

“Ancora’s interests are not aligned with all U.S. Steel stockholders,” U.S. Steel said. “Our stockholders will not be well served by turning over control of the company to Ancora. We are also concerned about the motivations behind these nominations, given Ancora’s and Alan Kestenbaum’s recent dealings with failed bidder Cleveland-Cliffs.”

Ancora is also based in Cleveland.

U.S. Steel had rejected a bid from Cleveland-Cliffs in favor of the offer from Nippon in 2023. Cleveland-Cliffs’ Goncalves said this month that he wanted to make a new bid for U.S. Steel.

Shares of U.S. Steel Corp. slipped more than 1% Monday.

Cleveland-Cliffs has a huge presence in northwest Indiana, with about 7,500 employees at plants in East Chicago and Burns Harbor.

U.S. Steel also has major operations in Indiana employing about 4,000 people. The company founded the city of Gary in Indiana in 1906 with its Gary Works operation that at one time employed some 30,000 people. The steelmaker also operates the Midwest Plant in Portage.

Nippon has several subsidiaries in Indiana, including Nippon Steel Pipe America in Seymour, Suzuki Garphyttan Corp. in South Bend, and Nippon Steel & Sumikin in Shelbyville.