By Svea Herbst-Bayliss and Rishabh Jaiswal
(Reuters) -Investment firm Ancora Holdings on Wednesday walked away from a bitter board room fight with U.S. Steel, days after President Donald Trump signalled the iconic American company might be taken over by a Japanese rival after all.
Ancora, which owns roughly 1% of U.S. Steel, in January mounted a proxy fight to oust the steelmaker’s chief executive officer after former President Joe Biden’s administration blocked a planned sale to Japan’s Nippon Steel.
Amid fresh signs this week that the sale may be resurrected, Ancora took the highly unusual step of withdrawing its nine director candidates thus scrapping one of the year’s most closely watched corporate fights.
“Ancora always wants fellow stockholders and stakeholders to benefit from the best outcomes, which in this case is the seemingly probable closing of the $55 per share transaction,” the investment firm said in a statement on Wednesday.
U.S. Steel’s stock price was mostly flat, trading close to $44 a share. In the last five days it climbed nearly 9% even as the broader market tumbled on fears that global businesses will suffer from Trump’s tariffs.
From the start, Ancora said it wanted to help engineer a turnaround for U.S. Steel, currently valued at roughly $10 billion, and came in only after news that the planned deal with Nippon was dead. It signalled to other shareholders that it was in favour of the deal but that in the absence of a sale it had plans to replace the CEO with Alan Kestenbaum, a former CEO of Canadian steel company Stelco.
But with Trump’s decision to have the U.S. conduct a new review of the deal, Ancora and other investors changed their view on whether the deal might go through.
Trump on Monday directed the Committee on Foreign Investment in the United States, which scrutinizes foreign investments for national security risks, to review Nippon’s bid for U.S. Steel to help determine if “further action” was appropriate.
A person familiar with Ancora’s thinking said the investment firm began contemplating ways to end its fight on Monday after the CFIUS decision, Following phone calls with other investors whose support would be necessary to win any board seats, the writing was on the wall. The biggest investors made clear they would not back Ancora’s fight and it was time to bow out, both not to be a distraction to a possible deal and to preserve the firm’s reputation, the person said.
Ancora has taken on a number of big companies and won board seats. Earlier this year, auto-parts company LKQ handed two board seats to the investor and a year ago Norfolk Southern shareholders elected three Ancora nominated directors to the railroad’s board. Late last year, Norfolk Southern pledged to work with Ancora to add a new director to avoid another fight with the firm.
