The United Steelworkers claims an activist investor wants to sell U.S. Steel’s state-of-the-art facilities in Arkansas and funnel the proceeds toward its aging blast furnaces, including the Mon Valley Works in Southwestern Pennsylvania.
These legacy operations are union-run, making Ancora Holdings Group’s apparent plan to flip the nonunion Big River facilities welcome news for USW.
Union leadership also noted plans for a new continuous casting and rolling facility at the Mon Valley Works in a letter that spoke favorably of the Cleveland-based investor’s long shot bid to remake the U.S. Steel board of directors.
They stopped short of a full-on endorsement, though.
“We will continue to carefully scrutinize every aspect of Ancora’s plan,” said USW International President David McCall and District 7 Director Mike Millsap.
As the union wades into the corporate power struggle, the current board has upped its criticism of Ancora’s ouster attempt.
A lengthy letter sent to shareholders Monday urges them to keep the board in place so it can salvage a $14.9 billion acquisition by Japan’s Nippon Steel. It also highlighted the Ancora slate’s ties to Cleveland-Cliffs, a rival and interested buyer of U.S. Steel.
Alan Kestenbaum, whom Ancora nominated to replace U.S. Steel CEO David Burritt, helmed Canadian steelmaker Stelco for several years before selling it to Cleveland-Cliffs for $2.8 billion in November. Two other members of the slate have ties to Cleveland-Cliffs, and Ancora is a longtime investor in the steelmaker.
“We believe this spoiler campaign is evidence of Ancora’s motivations to kill the high-premium Nippon Steel transaction, take control of the board and then try to force a low-premium and highly uncertain transaction with Cleveland-Cliffs with critical antitrust risk, or explore a sale of U.S. Steel’s domestic non-integrated assets,” the board said.
Ancora vowed to not solicit buyout proposals from Cleveland-Cliffs or any other firm when it went public with its plan in January. Since then, its stake in U.S. Steel has grown from about a quarter-percent to 1%.
On Wednesday, an Ancora spokesperson thanked the union for its positive feedback and touted the firm’s vision to “right current leadership’s wrongs by investing billions in union plants across the Rust Belt.”
A March regulatory filing from Ancora said it will take $1.5 billion at the Mon Valley Works, $500 million at the Gary Works in Indiana and $300 million at the Granite City Works in Illinois to restore these assets.
The USW and Ancora have not said what the Arkansas plants could net, though Nippon valued them and some mining operations last year at $9.2 billion.
Investors will elect a board May 6. Ancora is pushing for a delay until after June 18, which is the deadline given to U.S. Steel and Nippon to unwind their merger after then-President Joe Biden blocked the deal on national security grounds in January.
U.S. Steel and Nippon are fighting that decision in court, arguing Biden tainted a review process by the Committee on Foreign Investment in the United States and asking for a new one under the Trump administration.
They’ve also sued McCall and Cleveland-Cliffs CEO Lourenco Goncalves over what they believe was a collusive effort to tank the Nippon offer.