U.S. Steel Critiques Ancora’s Contradictory and Destructive Plan
In a recent statement, United States Steel Corporation has called out Ancora Holdings Group for unveiling a flawed and inconsistent strategy that could ultimately harm stockholders' interests. U.S. Steel refutes Ancora’s assertions, outlining a series of contradictions and unrealistic proposals that undermine the company’s success. This public response comes after Ancora attempted to disrupt U.S. Steel's potential merger with Nippon Steel, a deal that has already garnered overwhelming support from stockholders.
Ancora's Flipping Stance on the Nippon Steel Deal
Ancora's latest position on the Nippon Steel transaction has raised significant concerns among U.S. Steel’s board and stockholders. Initially, Ancora was a vocal opponent of the $55 per share deal, arguing it was detrimental to the company. However, after widespread backlash from stockholders and other stakeholders, Ancora reversed its stance, now claiming that the deal should be supported. U.S. Steel has criticized this sudden shift in position, questioning Ancora's commitment to stockholder value and accusing the group of lacking consistency and integrity in its approach.
U.S. Steel has also pointed out that Ancora’s previous opposition to the deal was unsubstantiated and based on misinformed assumptions. The $55 per share transaction with Nippon Steel, which has already been supported by over 98% of stockholders voting on the deal, promises significant financial benefits for U.S. Steel. The company has emphasized that any efforts to undermine this deal only serve to destabilize the firm’s future.
President Trump’s Memorandum: A Key Validation of U.S. Steel’s Position
Adding further weight to U.S. Steel’s position, President Trump recently ordered a fresh review by the Committee on Foreign Investment in the United States (CFIUS), reinforcing the company’s commitment to completing the deal with Nippon Steel. U.S. Steel's management has long defended the transaction, citing the significant investment it would bring from Nippon Steel, and the government’s decision to review the deal has validated their strategic direction.
In contrast, Ancora’s recent attempts to disrupt the CFIUS review process by pushing for changes at U.S. Steel's leadership have been described as counterproductive and potentially harmful. U.S. Steel argues that introducing new directors, who lack the necessary institutional knowledge of the ongoing transaction process, would only introduce unnecessary risks at a critical moment.
Ancora’s “Plan” Is Risky and Outdated
U.S. Steel’s response also focuses on the substance of Ancora’s proposed strategy. According to U.S. Steel, Ancora’s plan is based on outdated principles that would be destructive to the company’s value. One of the main aspects of Ancora’s proposal involves reversing U.S. Steel’s investment in mini mills, opting instead to focus solely on traditional blast furnace operations. U.S. Steel’s management has pointed out that mini mills, which use Electric Arc Furnace technology, are crucial to the company’s future success and have already proven to be a profitable and less volatile part of its operations.
U.S. Steel’s integration of mini mills has provided a more stable financial performance, reduced earnings volatility, and improved its overall valuation. Ancora’s strategy, on the other hand, would expose the company to greater risk and lower its overall market value, U.S. Steel argues.
Moreover, Ancora’s proposal to sell Big River Steel, a key asset in U.S. Steel’s mini mill strategy, would significantly hurt the company’s growth prospects. Analysts have already noted that U.S. Steel’s mini mill investments have led to improved financial results, with analysts projecting higher stock prices in the coming years. Ancora’s plan would reverse this trend and diminish the company’s competitive edge.
False Assumptions and Financial Engineering
U.S. Steel also calls attention to what it believes are false assumptions within Ancora’s “plan.” Ancora has proposed overly optimistic financial projections that rely on unrealistic assumptions about the timing of capital investments and potential returns. According to U.S. Steel, Ancora’s financial estimates, including projected EBITDA for 2027, are speculative and unsupported by credible data.
Ancora’s reliance on financial engineering and hypothetical scenarios is another point of contention. U.S. Steel has criticized Ancora for using inflated projections and unrealistic valuation multiples to justify their plan. Furthermore, Ancora’s claim of a $75 per share valuation for U.S. Steel is dismissed as a distant, unachievable goal.
A Proposal That Prioritizes Unions Over Stockholders
Another significant flaw in Ancora’s plan, according to U.S. Steel, is its reliance on the United Steelworkers (USW) leadership to influence decision-making at the expense of stockholder value. Ancora’s plan includes proposals to sell assets like the endless strip production facility, which U.S. Steel views as an unnecessary move that would ultimately reduce value for stockholders. U.S. Steel points out that the local members and leaders of USW have already supported the Nippon Steel deal, recognizing the long-term benefits for U.S. Steel’s workforce and stockholders alike.
U.S. Steel’s management has emphasized that their focus remains on maximizing value for stockholders while also ensuring that workers benefit from job security and future opportunities. In contrast, Ancora’s alignment with the USW leadership could result in a strategy that prioritizes union interests over the company’s financial health and stockholder value.
Key Takeaways:
• Ancora's Flipping Stance on the Nippon Steel Deal: Ancora initially opposed the $55 per share deal with Nippon Steel but has reversed its stance after stockholder backlash, raising questions about its credibility.
• President Trump’s Memorandum: A fresh review by CFIUS supports U.S. Steel’s commitment to completing the Nippon Steel transaction, further validating the company’s strategic direction.
• Ancora’s Outdated Strategy: Ancora’s proposal to reverse U.S. Steel’s investments in mini mills and focus solely on blast furnaces is considered risky and outdated, reducing long-term growth potential.
• Unrealistic Financial Projections: U.S. Steel dismisses Ancora’s financial assumptions and projections as speculative and unrealistic, with no solid foundation in the current market.
• Asset Sales and Market Volatility: Ancora’s plan to sell key assets like Big River Steel would increase earnings volatility and reduce the company’s market valuation.
• Union Influence on Strategy: U.S. Steel criticizes Ancora’s reliance on the USW leadership for decision-making, which could undermine stockholder value in favor of union interests.
• Vote “FOR” U.S. Steel’s Director Nominees: U.S. Steel urges stockholders to vote “FOR” its 10 director nominees and reject Ancora’s proposals, which the company believes are self-serving and ultimately harmful to stockholder value.
U.S. Steel’s management has reiterated its commitment to delivering value for stockholders through a well-thought-out, forward-thinking strategy that prioritizes growth, profitability, and long-term success.
