The battle over the future of U.S. Steel escalated on Monday as activist investor Ancora Holdings Group LLC called for a major leadership shake-up following the collapse of the company’s proposed $14.9 billion sale to Japan’s Nippon Steel Corp.
In a Feb. 10 letter sent to the U.S. Steel Board of Directors, Ancora executives Fredrick DiSanto and James Chadwick reiterated that the deal is dead, citing President Donald Trump’s recent comments as confirmation that regulatory approval would not be forthcoming.
“President Trump’s remarks on Friday should confirm — once and for all — that the sale has no chance of being resurrected,” wrote the Ancora leaders, referring to an announcement made during a Feb. 7 press conference held by Trump after his briefing with Japanese Prime Minister Shigeru Ishiba in Washington, D.C.
Ancora, a significant stakeholder in U.S. Steel, praised Trump’s stance on protecting American manufacturing and accused U.S. Steel CEO David Burritt of leading the company “off a cliff” in pursuit of a massive $72 million transaction-related payout.
“The board now must decide if it stands with shareholders or if it still stands with failed Chief Executive Officer David Burritt,” according to the letter, which asserts that Burritt’s attempt to push the Nippon sale had backfired.
DiSanto, chairman and CEO of Ancora Holdings Group, and Chadwick, president of Ancora Alternatives LLC, called on the U.S. Steel Board to immediately:
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Terminate the merger agreement and collect the $565 million breakup fee from Nippon.
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End all legal actions related to the failed merger and stop spending on deal-related advocacy.
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Engage with Ancora to appoint Alan Kestenbaum, a veteran steel executive known for turning around Stelco, as the new CEO.
The activist firm argues that Kestenbaum, along with Ancora’s proposed slate of independent directors, would be able to execute a turnaround strategy centered on revitalizing U.S. Steel’s aging blast furnace operations in Mon Valley and Gary Works.
The plan would leverage the breakup fee to reinvest in the company’s infrastructure and position it for long-term growth, according to the letter.
“We are offering the company access to a world-class chief executive officer, an experienced set of director candidates, and a clear path to revitalizing the business,” the executives wrote. “This not only represents the best value proposition put forth by any domestic party at this time, but it far exceeds what can be offered by Nippon at this point.”
They also pointed out that negotiating an investment from a foreign competitor like Nippon could take months, amounting to time that U.S. Steel can’t afford to misallocate based on its own statements.
“If there is no buyout premium to be paid, the board should hire a real leader, like Mr. Kestenbaum, to negotiate on behalf of the long-term stakeholders of the company, as opposed to Mr. Burritt, who has seemed more concerned with preserving a change of control payment than collecting the much-needed breakup fee,” wrote the Ancora executives.
They also raised concerns over labor relations, arguing that Burritt’s leadership had damaged ties with U.S. Steel’s union workers ahead of an upcoming contract negotiation. They contend that a fresh leadership team is needed to repair those relationships and effectively navigate future agreements, according to the letter.
“It is time for U.S. Steel to get back to business and focus on leveraging President Trump’s pending tariffs as a tailwind for a turnaround,” DiSanto and Chadwick wrote. “The only thing standing in the way is Mr. Burritt and his focus on securing a massive golden parachute at all costs.”
They concluded that it’s only a matter of time until U.S. Steel’s shares begin to reflect the fact that a busted deal “has left investors with a failed and visionless leader in Mr. Burritt.”
“We urge you, as fiduciaries, to engage with us before there is any permanent impairment of value at U.S. Steel,” they wrote.
Former President Joe Biden in January blocked Nippon’s bid to buy U.S. Steel, citing national security concerns. U.S. Steel and Nippon claimed Biden’s action was unconstitutional and filed a lawsuit in federal court to have his decision overturned.
Trump also opposed the proposed deal during his 2024 presidential campaign and he reiterated his views in a briefing after his meeting with Ishiba.
“We didn’t like the idea,” Trump said of the proposed Nippon-U.S. Steel merger during the press conference. “U.S. Steel is a very important company to us. And we didn’t want to see that leave. It wouldn’t actually leave, but the concept psychologically was not good.
“So they’ve agreed to invest heavily in U.S. Steel as opposed to own it,” he said. “And that sounds very exciting. And we’re going to meet with [Nippon] next week … and they’ll work out the details. I’ll help. I’ll be there to mediate and arbitrate.”
Like Trump, Ishiba said through an interpreter that Nippon would invest in U.S. Steel rather than buy the Pittsburgh-based company, noting that Japan would provide technology for U.S. Steel to manufacture better quality products in the United States.
“It is not one sided,” the prime minister said. “It will be reciprocal. It will be mutually beneficial.”