Written by AP Business Writer Michelle Chapman
After purchasing stock in the company, an asset manager is attempting to stop Nippon Steel from acquiring U.S. Steel and to remove the U.S. steelmaker’s management.
Ancora opposes U.S. Steel’s transaction with Nippon and thinks that the CEO, David Burritt, and the board have made closing the deal a top priority since they stand to gain over $100 million if it proceeds.
Citing national security concerns, Nippon Steel and U.S. Steel filed a federal lawsuit earlier this month contesting a Biden administration decision to halt Nippon’s proposed $15 billion acquisition of the Pittsburgh-based company.
Ancora is looking for a new CEO and an independent group of directors at U.S. Steel who are determined to back out of the Nippon agreement. The company said Monday in an open letter that it has proposed nine independent directors to be elected at this year’s annual shareholders meeting of U.S. Steel. As part of their strategy, those directors intend to choose Alan Kestenbaum, the former chairman and CEO of Stelco, as the next CEO of U.S. Steel.
Instead of looking for other bidders or seeking to sell the company, Ancora wants the new board members to concentrate on U.S. Steel’s turnaround. The $565 million breakup fee is another thing it wants them to seek.
According to Ancora, U.S. Steel’s high debt, lackluster profitability, exorbitant capital expenditures, and lack of a contingency plan have put the company in a terrible situation.
There are repercussions when local communities are not adequately engaged by out-of-touch leadership. It went on to say that, barring a miracle, Ancora thinks the company’s leadership needs to be significantly and immediately reconstituted.