In a recent letter to the Board of Directors of United States Steel Corporation (NYSE: X), Ancora Holdings Group, LLC, a diversified investment firm managing roughly $10 billion in assets, firmly rejected the proposed sale of the steel giant to Nippon Steel Corporation (“Nippon”). The letter, issued on February 10, 2025, follows President Donald J. Trump’s remarks reaffirming his opposition to the transaction, signaling to the Board that the deal is effectively dead.
Ancora’s letter stresses that the Board must now choose whether to support shareholders or align with what they perceive as the failed leadership of U.S. Steel’s CEO, David Burritt. The firm has drawn a line in the sand, offering a path forward that they argue will restore value to U.S. Steel while firmly rejecting the Japanese steel giant as a potential buyer.
The Collapse of the Nippon Sale
The crux of Ancora’s argument rests on the idea that the sale to Nippon is now untenable. Citing President Trump’s public opposition to the deal, Ancora asserts that it has no chance of revival. The letter praises the president for his dedication to revitalizing America’s manufacturing sector and protecting domestic industries, a sentiment they believe aligns with their own interests as shareholders in U.S. Steel.
Ancora is adamant in its call for the Board to abandon the sale to Nippon, suggesting that it has become a failed gamble by U.S. Steel’s CEO, David Burritt. The firm sharply criticizes Burritt for focusing on securing a $72 million payday from the transaction, which they argue would have been detrimental to U.S. Steel’s long-term future. The emphasis on a potentially lucrative but ultimately unproductive deal with Nippon, Ancora believes, would have wasted critical shareholder capital.
A New Path: Leadership Change and Capital Investment
Ancora, in its letter, offered a clear alternative to the failed merger agreement with Nippon: a focus on reinvigorating U.S. Steel through new leadership and a targeted capital investment strategy. The firm pointed to Alan Kestenbaum, a renowned business leader known for his successful turnaround of Stelco, a Canadian steel company, as the key figure who could lead U.S. Steel back to profitability.
Kestenbaum, who was instrumental in the turnaround of Stelco following its bankruptcy, is positioned as the perfect candidate to oversee a multi-billion-dollar capital investment program. This would focus on revitalizing U.S. Steel’s legacy blast furnaces at key facilities such as Mon Valley and Gary Works. Ancora believes that these investments, combined with the $565 million breakup fee from Nippon, could provide the necessary funding to reposition U.S. Steel as a formidable force in the American steel industry.
The firm’s proposal also includes a slate of independent director candidates who, along with Kestenbaum, are ready to take on the task of reversing U.S. Steel’s current trajectory. Ancora argues that this leadership team, in contrast to the current management under Burritt, would provide a clear and viable path to restoring shareholder value.
A Stagnant Board or a Visionary Future?
Ancora’s letter does not mince words in its critique of the U.S. Steel Board and its management. The firm’s message is clear: if the Board continues to back Burritt and clings to the failing Nippon deal, it risks driving the company further into decline. They express concern that the Board’s focus on foreign investment from Nippon, which could take months to materialize, is a misplaced priority for a company in need of urgent turnaround action.
Ancora also raises the issue of U.S. Steel’s relationship with its union workers, which has reportedly been irreparably damaged under Burritt’s leadership. With a new labor contract looming, Ancora argues that Burritt’s inability to repair this vital relationship could result in a failure to secure a mutually beneficial agreement for both shareholders and workers.
The firm is unequivocal in its call for a change in leadership, stressing the need for a new CEO like Kestenbaum who can negotiate on behalf of long-term stakeholders, not just appease the interests of merger arbitrage funds or hedge their bets on a doomed foreign investment deal.
The Time for Action Is Now
In closing, Ancora Holdings calls on the Board of U.S. Steel to take immediate action before the company suffers irreparable harm. The firm points to the opportunity presented by President Trump’s pending tariffs as a powerful tailwind for a steel industry revival in the United States. Ancora argues that the company’s future lies in capitalizing on this opportunity rather than continuing to waste time and resources on an unfeasible deal with Nippon.
The firm strongly believes that U.S. Steel’s leadership under Burritt has failed to navigate these turbulent times, and that it is only a matter of time before the company’s stock price reflects the stagnation caused by his lack of vision and focus on self-interest. Ancora is urging the Board, as fiduciaries of shareholder value, to engage with them before it is too late.
A Pivotal Moment for U.S. Steel
As U.S. Steel stands at this critical juncture, the decisions made by the Board in the coming months will shape its future. Ancora’s letter represents a clarion call for leadership change, strategic investment, and a return to a shareholder-first approach. The question now is whether the Board will heed that call or continue down a path that may ultimately lead to further decline.
This letter from Ancora Holdings highlights the critical crossroads U.S. Steel faces as it grapples with its leadership and strategic direction. With the Nippon sale now officially declared dead, the future of the company depends on whether the Board will embrace fresh leadership and a forward-thinking investment strategy or continue to stand behind a failing CEO.
