Ancora Holdings Readies Proxy Fight At US Steel Amid Merger Chaos

Ancora Holdings, an activist investor, is gearing up for a proxy battle with United States Steel Corporation (X) as the company's proposed merger with Japan's Nippon Steel Corporation (NISTF) faces uncertainty. Ancora, which holds a 0.18% stake in U.S. Steel, has nominated nine candidates for election to the company's board of directors at the upcoming 2025 annual stockholder meeting. The investor aims to replace U.S. Steel's leadership and shift the company away from its unsuccessful merger with Nippon Steel.

U.S. Steel has accused Ancora of having unclear objectives, particularly in light of its ties with Cleveland-Cliffs Inc (CLF), a previous bidder that did not succeed in acquiring the company. Ancora, however, maintains that its actions are motivated by a desire to restore shareholder value and improve the company's operational efficiency. The investor believes that U.S. Steel's current board and CEO have not effectively managed the company, leading to a decline in shareholder value.



The proposed merger between U.S. Steel and Nippon Steel has faced significant opposition, with President Joe Biden blocking the deal earlier this year due to national security concerns. Both companies are contesting Biden's decision in court. Ancora's involvement follows U.S. Steel's agreement in late 2023 to sell itself to Nippon Steel for more than $14 billion. However, the acquisition was blocked by Biden, who cited national security concerns, with other officials also voicing opposition.

Ancora's push for a proxy battle comes as U.S. Steel prepares to report its fourth-quarter earnings on January 30. Analysts expect the company to post revenue of $3.54 billion in Q4, down from $4.15 billion in the year-ago quarter. The company is also expected to report a loss of $0.11 per share, compared with earnings of $0.67 in the prior-year quarter.

The outcome of the proxy battle and the ongoing litigation surrounding the proposed merger with Nippon Steel could have significant implications for U.S. Steel's share price and overall market sentiment. If Ancora's nominees are elected to the board and Kestenbaum becomes the new CEO, they could bring fresh perspectives and operational improvements to the company. However, the uncertainty surrounding the merger and the potential change in leadership could also lead to short-term volatility in the stock price.

In conclusion, Ancora Holdings' involvement in the ongoing litigation and uncertainty surrounding the proposed merger with Nippon Steel could have both short-term and long-term impacts on U.S. Steel's share price and overall market sentiment. The proxy battle and the potential change in leadership could lead to short-term volatility in the stock price, while the long-term impact could depend on the operational improvements and strategic shifts brought by Ancora's nominees. Investors should closely monitor the developments surrounding the proxy battle and the ongoing litigation to assess the potential impact on U.S. Steel's share price and overall market sentiment.