U.S. Steel (X) is expected to face a proxy battle soon with activist investor Ancora Holdings, according to the Wall Street Journal. Ancora aims to block the company’s proposed merger with Japan’s Nippon Steel (JP:5401) and nominate nine director candidates to U.S. Steel’s board, including Alan Kestenbaum, former CEO of Canadian steel company Stelco. The potential proxy battle comes as U.S. Steel prepares to report its fourth-quarter earnings on January 30.
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Currently, analysts expect U.S. Steel to post revenue of $3.54 billion in Q4, down from $4.15 billion in the year-ago quarter. Further, the company is expected to report a loss of $0.11 per share, compared with earnings of $0.67 in the prior-year quarter.
Ancora Pushes for Leadership Change at U.S. Steel
Further, the investor seeks to remove the company’s current CEO, David Burritt. The investor believes that Kestenbaum’s successful track record in turning around Stelco makes him the right candidate to lead U.S. Steel.
Ancora argues that U.S. Steel disappointed shareholders by accepting a foreign takeover bid instead of merging with domestic rivals like Cleveland-Cliffs (CLF) and prioritizing litigation over internal improvements.
U.S. Steel and Nippon Steel Deal Sees New Hope
The move comes after U.S. Steel’s proposed merger with Nippon Steel was blocked by the U.S. government earlier this month on national security grounds. However, the U.S. Committee on Foreign Investment in the United States (CFIUS) extended the deadline for Nippon Steel to abandon the acquisition to mid-June 2025, increasing the likelihood the deal could proceed despite earlier national security concerns.
It is worth mentioning that following the opposition, U.S. Steel sued the government to challenge this decision. Also, Nippon Steel proposed appointing a U.S.-majority board to address security concerns. The company argues that the deal would benefit the American steel industry by investing in outdated plants.
Investors should note that the uncertainty over the deal has impacted U.S. Steel stock’s price and raised concerns about its future. Importantly, the company has warned of potential plant closures and production shifts to lower-cost factories if the Nippon Steel deal does not materialize.
Is X Stock a Buy or Sell?
Turning to Wall Street, U.S. Steel stock has a Moderate Buy consensus rating based on four Buys and two Holds assigned in the last three months. At $39.80, the average U.S. Steel price target implies a 6.39% upside potential. Shares of the company have declined 8.35% over the past six months.
