By Lauren Thomas

Activist investor Ancora Holdings is waging a proxy battle at U.S. Steel and wants the company to turn the page from its failed marriage with Nippon Steel.

Ancora unveiled a plan that would rally shareholders around a plan to oust U.S. Steel's chief executive and drop litigation to salvage a merger with the Japanese steelmaker. The firm isn't interested in pursuing a sale of U.S. Steel to another party, Ancora said, confirming an earlier report from The Wall Street Journal.

Ancora said its priority is seeing through a turnaround of U.S. Steel in the public markets.

The activist's arrival comes after U.S. Steel agreed to sell itself to Nippon Steel for more than $14 billion in late 2023. Former President Joe Biden blocked the deal at the start of the year on national-security concerns. President Trump and others in his administration have also said they oppose the deal.

Biden's decision is being challenged in court by both companies.

Ancora has nominated nine director candidates to U.S. Steel's 12-person board, including former Stelco CEO Alan Kestenbaum. Stelco, a Canadian steel company, was acquired by Cleveland-Cliffs last year.

U.S. Steel said it is still committed to pursuing the deal with Nippon Steel. "Our stockholders will not be well served by turning over control of the company to Ancora," the company said.

It also said Ancora's stake in the business is less than 1%. Ancora said it is in the process of amassing a "meaningful" stake that it plans to disclose in the future.

The Journal reported this month that Cleveland-Cliffs and Nucor have been discussing teaming up for a fresh offer for U.S. Steel. A new deal couldn't happen before June 18, which is when U.S. Steel's deal agreement with Nippon Steel is set to expire.

Cleveland-Cliffs had previously sought to acquire U.S. Steel before being outbid by Nippon Steel.

U.S. Steel and Nippon Steel also filed a lawsuit accusing Cleveland-Cliffs CEO Lourenco Goncalves and United Steelworkers President Dave McCall of racketeering and anticompetitive activities to prevent the Nippon Steel deal from being completed.

Leaders of the United Steelworkers had vociferously opposed the sale, saying Nippon Steel's ownership would be bad for steelworkers and the American steel industry.

In a bid to win domestic support, Nippon Steel has said it would appoint a board to U.S. Steel with a majority of U.S. citizens.

All the back and forth has clouded the future of 124-year-old U.S. Steel. Executives have said they might close plants and shift production to lower-cost factories if the Nippon Steel deal doesn't happen. The uncertainty has weighed on U.S. Steel shares, which have fallen over the past year. The company had a market value of around $8.4 billion as of Friday, with shares closing at $37.41.

Nippon Steel had agreed to pay $55 a share for U.S. Steel. The Japanese company is on the hook to pay U.S. Steel a breakup fee of $565 million if the transaction can't be completed.

Ancora believes U.S. Steel let shareholders down by selling to a foreign buyer rather than a domestic suitor, and by pursuing litigation rather than giving priority to financial and operational fixes.

It hopes shareholders will rally around Kestenbaum, who years ago helped buy distressed Stelco out of bankruptcy and turn that business around.

Ancora, based in Cleveland, has around $10 billion in assets under management.

The firm specializes in running campaigns at industrial and transportation companies. It has recently won board seats at plastic-packaging manufacturer Berry Global, vehicle auctioneer RB Global and railroad operator Norfolk Southern.

--Ben Glickman contributed to this article.

Write to Lauren Thomas at lauren.thomas@wsj.com

(END) Dow Jones Newswires

January 27, 2025 07:27 ET (12:27 GMT)

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