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Investing.com-- Activist investor Ancora Holdings is preparing to launch a proxy battle against U.S. Steel, aiming to overhaul its leadership and redirect its strategy following the collapse of its $14 billion merger with Japan’s Nippon Steel Corp (TYO:5401), the Wall Street Journal reported on Sunday citing sources.
Ancora plans to rally shareholders around a proposal to replace U.S. Steel’s CEO and abandon litigation aimed at salvaging the blocked Nippon Steel deal, the report stated.
However, U.S. Steel is not interested in pursuing a sale to another party, the report added.
The activist investor, which has not disclosed its stake in U.S. Steel, is advocating for operational improvements and financial reforms over a sale or further legal entanglements.
Ancora has nominated nine nominees for U.S. Steel’s 12-member board including former Stelco (TSX:STLC) CEO Alan Kestenbaum, who previously revitalized the Canadian steelmaker before its acquisition by Cleveland-Cliffs (NYSE:CLF), according to the report.
The Nippon Steel merger faced heavy resistance from U.S. regulators, including a veto by President Joe Biden on national security grounds earlier this year.
Nippon Steel, which agreed to pay $55 per share and faces a $565 million breakup fee if the transaction fails, has proposed appointing a U.S.-majority board to address these concerns, according to the WSJ report.
Ancora contends the company must prioritize restoring shareholder value through internal changes rather than seeking external rescue, the report said.
The WSJ earlier reported that Cleveland-Cliffs and Nucor (NYSE:NUE) were exploring a joint bid for U.S. Steel once its agreement with Nippon Steel expires in June, though the fate of America’s third-largest steelmaker remains uncertain.