Ancora Holdings, an activist investor, is escalating its campaign against U.S. Steel (X.N) by demanding access to a range of board records, including minutes and financial documents. This move comes as U.S. Steel navigates a legal challenge to its proposed merger with Japan’s Nippon Steel (5401.T).
Key Highlights:
Boardroom Challenge:
Ancora launched its challenge last month, seeking to replace certain board members and the CEO, David Burritt. The company is currently embroiled in a lawsuit against a decision by former President Joe Biden that blocked the merger on national security grounds.
U.S. Steel has warned that failing to complete the merger could lead to layoffs and plant closures.
Legal Strategy:
Ancora’s request for a “books and records” review is a strategic move to gather evidence for its boardroom battle. The investor aims to investigate potential wrongdoing related to the lawsuit and Burritt’s trading activities.
In a letter addressed to Megan Bombick, U.S. Steel’s Associate General Counsel, Ancora expressed concerns about whether the board violated its fiduciary duties by pursuing the lawsuit.
Shareholder Position:
Ancora currently holds approximately 500,000 shares (less than 1%) in U.S. Steel but intends to significantly increase its stake. The company’s market value stands at $8.7 billion.
Ancora has nominated nine director candidates for U.S. Steel’s 12-person board, including potential replacements for Burritt.
Concerns Over Merger Litigation:
Ancora argues that U.S. Steel’s ongoing litigation is detrimental to shareholders, urging the board to focus on improving the business instead of pursuing the merger.
The activist investor has set a deadline of February 24 for U.S. Steel to provide the requested documents concerning the merger and Burritt’s trading plan.
Potential Leadership Change:
Ancora has identified Alan Kestenbaum, former CEO of Stelco, as a potential replacement for Burritt. Stelco was acquired by Cleveland-Cliffs last year.
Political Context:
Recently, President Donald Trump indicated that Nippon’s bid might shift from a purchase to an investment, while Japanese officials have criticized the U.S. government’s blocking of the deal as “unjust political interference.”
Past Successes:
Ancora has a track record of winning board seats in previous proxy battles, including recent successes with LKQ and Norfolk Southern.