Ancora Pushes for Major Overhaul of U.S. Steel’s Leadership and Strategy
In a bold move on January 27, 2025, Ancora Holdings Group, an investment firm managing around $10 billion in assets, issued a direct challenge to the leadership of U.S. Steel, proposing sweeping changes to the company’s board and management. Ancora, which has invested heavily in U.S. Steel, is discontented with the company’s trajectory, specifically criticizing its Board of Directors and CEO, David Burritt, for their decision to pursue a controversial sale to Japan’s Nippon Steel Corporation.
The open letter issued by Ancora outlines a firm stance on what it sees as a series of missteps that have led U.S. Steel into a precarious position. Chief among these is the failed transaction with Nippon Steel. The Board’s decision to entertain the acquisition by a foreign company, especially one offering just a marginally better bid than a domestic rival, is seen by Ancora as an indication of misaligned priorities and a lack of foresight. The firm believes the pursuit of this sale has severely undermined U.S. Steel's standing both legally and operationally, especially since the deal was blocked by a Presidential Executive Order on national security grounds.
Ancora asserts that the company’s leadership, particularly CEO David Burritt, has played a significant role in the deterioration of U.S. Steel’s performance. Ancora’s criticisms focus on Burritt’s failure to adapt to changing market conditions, his tendency to prioritize risky strategies over financial stability, and the enormous personal financial incentives he stood to gain if the sale had been completed. Burritt’s reported mismanagement, including failing to hit financial targets and issuing overly optimistic projections that were not met, has prompted Ancora to call for drastic leadership changes.
Criticism of the Nippon Steel Deal and the Blocked Acquisition
One of the central themes of Ancora’s letter is the critical evaluation of U.S. Steel's decision to pursue the Nippon deal despite opposition from several influential figures and groups. The sale was officially blocked by a Presidential Executive Order citing national security concerns, which Ancora believes further damaged U.S. Steel’s position. President Donald Trump, a vocal critic of the transaction, had previously stated his opposition to foreign acquisitions of U.S. industrial companies, particularly from Japan, citing long-standing concerns about national security and the impact on American manufacturing.
This blockage, according to Ancora, signifies the dead end that the company has reached under its current leadership. Despite this, U.S. Steel’s Board has pressed forward with legal action to challenge the Executive Order, even though there is no precedent for such an acquisition succeeding once blocked by the President. Ancora argues that the ongoing litigation is futile and continues to drain valuable resources, especially given that it faces opposition not only from the U.S. government but also from labor groups such as the United Steelworkers and a bipartisan coalition of lawmakers, including Vice President J.D. Vance and Senator Marco Rubio.
Further complicating matters, Ancora points out that U.S. Steel has been fighting a battle on multiple fronts, including legal challenges, resistance from organized labor, and bipartisan political opposition. The firm believes that the company’s leadership has failed to acknowledge the severity of these challenges and continues to waste time and money on a transaction that has no realistic chance of succeeding.
The Case for Leadership Change: David Burritt’s Underperformance
At the heart of Ancora’s critique is its call for the removal of U.S. Steel’s CEO, David Burritt. Ancora accuses Burritt of being a conflicted, underperforming leader who has steered the company toward poor decision-making, particularly in relation to the Nippon deal. Ancora argues that Burritt’s focus on pushing the sale, even in the face of mounting opposition and clear legal obstacles, reflects a disregard for U.S. Steel’s long-term financial health and shareholder value.
Ancora also highlights Burritt’s troubling public statements, including a January 3rd remark in which he described President Biden’s decision to block the deal as “shameful and corrupt.” Furthermore, Burritt reportedly referred to the United Steelworkers’ President as a “union boss,” and made inflammatory accusations about political corruption, positioning himself against both the Biden administration and labor unions. Ancora contends that these actions undermine Burritt’s credibility and his ability to lead U.S. Steel forward, particularly when dealing with complex political and economic challenges.
Additionally, Ancora points to Burritt’s management record, which it says includes a series of financial missteps. For instance, the Big River acquisition—designed to expand U.S. Steel’s mini-mill operations—has been plagued by cost overruns. Ancora argues that Burritt failed to properly address the growing financial burdens associated with this acquisition, which led to a dramatic drop in earnings before interest, taxes, depreciation, and amortization (EBITDA). In the face of these challenges, Burritt’s optimistic public statements were criticized as out of touch with the reality of the company’s struggles.
In fact, U.S. Steel has consistently underperformed compared to its industry peers, and its total shareholder returns under Burritt have lagged by a staggering 227.7%. Ancora believes that Burritt’s failure to focus on the company’s core operations and his continued promotion of a failed transaction have put U.S. Steel at risk of further financial deterioration.
Ancora’s Slate of Independent Director Candidates and Proposed Leadership Change
In response to U.S. Steel’s troubled leadership, Ancora has nominated a new slate of nine highly qualified, independent candidates to the Board of Directors. This slate is aimed at injecting fresh perspectives, expertise, and leadership into the company, with a focus on governance, cost efficiency, and operational effectiveness. The nominees include individuals with backgrounds in corporate governance, finance, industrials, manufacturing, and public policy—key areas that Ancora believes are vital for the company’s resurgence.
A central figure in Ancora’s proposed leadership overhaul is Alan Kestenbaum, a seasoned executive with a legendary reputation in the steel industry. Kestenbaum, who previously led Stelco Holdings Inc., a major Canadian steel producer, is widely praised for his successful turnaround of the company, delivering over 450% total shareholder returns. Ancora believes that Kestenbaum’s extensive experience in the steel industry and his proven ability to drive operational excellence and shareholder value make him the ideal candidate to replace Burritt as CEO of U.S. Steel.
Ancora’s proposed leadership team is not just focused on replacing personnel but is committed to transforming U.S. Steel into a more efficient, competitive, and profitable company. Their strategy centers around a public market turnaround, where U.S. Steel can leverage its strengths, such as its expertise in steel production, to boost shareholder value and operational performance. Ancora also emphasizes the importance of aligning U.S. Steel with the broader "America First" agenda championed by President Trump, including policies designed to support American manufacturing and reduce reliance on foreign steel imports.
Focus on Public Market Revival Rather Than Foreign Acquisition
In stark contrast to the Board’s ongoing pursuit of a sale to Nippon Steel, Ancora stresses that U.S. Steel’s future lies in revitalizing its core business and pursuing long-term growth in the public market. Ancora’s leadership slate does not seek to entertain additional bids for the company but rather aims to stabilize and strengthen the business from within. Ancora’s vision includes improving the company’s cost structure, optimizing its labor relations, increasing profitability, and driving long-term shareholder returns.
By placing a focus on the public market and bypassing the foreign acquisition route, Ancora aims to return U.S. Steel to its rightful place as a leader in the American manufacturing sector, with the potential for sustainable growth and profitability for years to come.
