By Anna Alimani
In a January 27 open letter, Ancora Holdings announced an intended proxy fight against U.S. Steel’s current Board of Directors in regards to the company’s acquisition by Nippon Steel. In its announcement, Ancora, under its new proposed CEO and board, said it will not “solicit acquisition proposal from…any other partner (domestic or foreign).”
However, the odd timing of the announcement and the vague promise not to sell the company raises questions about the seriousness of the effort, as well as its unintended consequences.
U.S. Steel has made it clear that it needs the additional resources that result from a merger to continue its operations that have been slowing in the past years. With Ancora’s longtime ties to failed bidder Cleveland-Cliffs, all signs point to this proxy fight being a path of destruction for U.S. Steel if it does not stop.
One way or the other, U.S. Steel needs an injection of funds to continue operations. The most realistic way to achieve that is Nippon Steel’s proposed acquisition.
This specific proxy fight launched by Ancora does not have the best interests of U.S. Steel, its shareholders, and its employees in mind.
Ancora’s ties to failed bidder Cleveland-Cliffs are clear and reflective of the true motives of its unwelcome shareholder activism.
In this U.S. Steel proxy fight, its proposed directors on the board include multiple individuals with direct and indirect ties to Cleveland-Cliffs:
Alan Kestenbaum, the proposed new CEO for U.S. Steel by Ancor, has a career that has been laced in controversy from the start. Kestenbaum started his career working for Marc Rich, a commodities trader charged with tax evasion and trading with Iran during the hostage crisis of the late ‘70s. Today, Kestenbaum prioritizes a far-left social agenda over getting things done/what is best for business. In 2020, his company Stelco implemented the BlackNorth Initiative, which enforced DEI hiring in Canada, a practice that has become unpopular across North America.
Kestenbaum also a history of moving employees overseas to China. At a 2010 Steel Summit in New York, he said, “we wanted to capture that profit margin. So we bought a facility in China, and have moved several people over there.”
Additionally, Kestenbaum’s business dealings in China pose a national security threat. At that same summit, he said he wants to focus more on business within China and expanding their facilities. Later in a 2015 conference call, Kestenbaum spoke about his desire to invest in Chinese “solar, silicon and automotive.” Someone perusing deals on critical infrastructure with America’s top competitor/adversary does not have the values needed to be CEO of U.S. Steel.
Ancora Holdings is attempting to create chaos for U.S. Steel, as opposed to truly helping the company. They are using Biden's block of the Nippon deal as an opportune time to pull the wool over the public’s eye and profiteer at the expense of what is best for U.S. Steel, shareholders, and employees.
Anna Alimani is an economic and corporate analyst, holding a Bachelor’s degree in Business Administration from Purdue University and an Executive MBA from Columbia Business School, specializing in Private Equity.