U.S. Steel and an activist investor are sparring over Nippon sale
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U.S. Steel yesterday disavowed a push from activist investor Ancora Holdings to drop its proposed sale to Japan's Nippon Steel Co.
Why it matters: The future of the Pittsburgh icon is in limbo after a proposal to sell the company to Nippon was blocked by then-President Biden four weeks ago, but the deal is not dead yet.
Driving the news: Ohio-based Ancora Holdings sent a letter to the U.S. Steel board on Monday urging the company to boot CEO David Burritt and drop the proposed sale to Nippon.
- U.S. Steel said in a statement that Ancora only holds a 0.18% stake in the company, and that "Ancora's interests are not aligned with all U. S. Steel stockholders."
Context: Nippon offered to purchase U.S. Steel for $14.9 billion, pledging to maintain the company's headquarters in Pittsburgh and commit $1 billion in upgrades to U.S. Steel's three industrial facilities in the Mon Valley.
- U.S. Steel approved the deal, which was announced in December 2023. The company's shareholders were set to earn $55 per share if the sale was approved.
Catch up quick: Biden blocked the sale on Jan. 3, citing national security concerns and a desire to ensure American steel remains domestically owned. A lot has happened since.
- Nippon and U.S. Steel filed lawsuits on Jan. 6 against the Biden administration claiming the move was politically motivated.
- Later in January, the Biden administration delayed enforcement of the block to allow for legal challenges to play out.
State of play: Burritt appeared on CNBC earlier this month and said he hopes that President Trump will "see how this helps make U.S. Steel great again."
- Last month, Trump said he wants U.S. Steel to remain domestically owned and claimed his tariff proposals will boost the company's standing.
- "We have a new president that will take a fresh look at this," Burritt said. "We understand what his current views are, but he's a smart guy."
Between the lines: Another bidder emerged when Lourenco Goncalves, CEO of domestic steel rival Cleveland-Cliffs, said in mid-January he would move the Ohio company's workforce to Pittsburgh and retain U.S. Steel's name if Cleveland-Cliffs bought the company.
- Cleveland-Cliffs is reportedly partnering with Charlotte-based Nucor on a possible bid to buy U.S. Steel, according to CNBC.
- Ancora is requesting that U.S. Steel replace Burritt with Alan Kestenbaum, the former CEO of Canada's Stelco, which was acquired last year by Cleveland-Cliffs.
- U.S. Steel said it is concerned about Ancora's motivation in nominating Kestenbaum, given its dealings with Cleveland-Cliffs.
What's next: Enforcement on Biden's block is delayed until June 18.
- If U.S. Steel's legal efforts prevail, the proposal will then be reviewed by the Trump administration.