(Qilai Shen/Bloomberg News)
Ancora Holdings Group has unveiled a turnaround plan for United States Steel Corp. it estimates would deliver the steelmaker’s shareholder’s more than $75 per-share in value, if a takeover by Nippon Steel Corp. falls through.
The activist investor, which is seeking to replace U.S. Steel’s board and CEO, outlined a plan that would involve using existing cash and liquidity to invest about $3 billion to revitalize plants in Pennsylvania, Ohio and Illinois, according to a letter to shareholders April 7, confirming a Bloomberg News report.
It would also seek to use proceeds from asset sales to help fund a new $3.2 billion blast-furnace facility in Indiana.
Ancora wants U.S. Steel to explore a sale of its non-union Big River assets, which it estimates could be worth $8 billion to $9 billion. It would use proceeds from that divestiture and potentially others to fund a special dividend of approximately $19.25.
The U.S. Steel Corp. Clairton Coke Works facility in Clairton, Pa. (Justin Merriman/Bloomberg)
Ancora, which has held discussions with the United Steelworkers in recent weeks, has been telling shareholders that Alan Kestenbaum, its candidate for CEO, would leverage his union relationships to secure a new labor agreement before the current one expires in 2026. Kestenbaum and Ancora’s board nominees would also sustain existing efforts to get the Nippon deal approved by the government.
Shares of U.S. Steel fell 1.7% to $38.29 on April 4, giving the company a market value of about $8.7 billion. Ancora holds about 1% of the company’s outstanding stock, requiring it to win shareholder approval for its plans.
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“We are offering a win-win-win solution,” Ancora CEO Fredrick D. DiSanto and President James Chadwick said. “We estimate the execution of our full strategy, including asset sales, the special dividend and the capital investment program to reinvigorate U.S. Steel’s legacy assets, could yield a nearly 100% increase in stockholder value. This represents a target pro forma total return of $75.67 to stockholders.”
Ancora’s U.S. Steel stake is worth more than $100 million, according to the letter.
A representative for Ancora declined to comment. A representative for U.S. Steel didn’t immediately respond to a request for comment.
Ancora’s turnaround plan is the latest twist in the battle over the iconic U.S. steelmaker. Nippon Steel, which is fighting to rescue its friendly deal for the company, has offered to invest an additional $7 billion if it is able to complete its $14.1 billion takeover, people familiar with the matter said last week. U.S. Commerce Secretary Howard Lutnick, a key player in determining U.S. Steel’s future, held back-to-back meetings last month with Ancora and Nippon.
Ancora unveiled an activist position in U.S. Steel in January, seeking to replace the board, install Kestenbaum as CEO and abandon the Nippon Steel deal to collect the $565 million breakup fee. Kestenbaum, who has a long history in the commodities world, sold Canadian steelmaker Stelco to Cleveland-Cliffs Inc. last year for about C$3.85 billion ($2.7 billion).
