By Svea Herbst-Bayliss
NEW YORK(Reuters) – Activist investor Ancora Holdings is demanding access to records from U.S. Steel, ranging from board minutes to financial documents, as it ratchets up a campaign to replace some of the company’s board members and chief executive, according to a letter seen by Reuters.
Ancora last month launched a boardroom challenge at U.S. Steel as the iconic American company is fighting in court to salvage a planned merger with Japan’s Nippon Steel. The company is asking the U.S. Court of Appeals to set aside former U.S. President Joe Biden’s order that blocked the deal citing national security concerns. U.S. Steel has said it would need to make layoffs and close plants if the deal were scuttled.
Ancora’s decision to make a so-called books and records request shows how the activist is using one of the legal tools available to try and win a potentially bitter board room battle.
In its letter – sent to Megan Bombick, U.S. Steel Associate General Counsel, Securities & Corporate Secretary – Ancora told U.S. Steel it wants to investigate “potential wrongdoing in connection with … the company’s futile (lawsuit) … and “the unusual trading plan of the company’s CEO (David Burritt).”
According to the letter, Ancora is looking for information to determine whether the board violated its fiduciary duties by filing the lawsuit and to determine whether Burritt “sought to trade on material nonpublic information.”
The investor currently owns roughly 500,000 shares, or less than 1%, in U.S. Steel but has said it plans to increase its position significantly. The company, which was once the world’s biggest steel producer, has a market value of $8.7 billion.
Last month, Ancora nominated nine director candidates to U.S. Steel’s 12-person board, including an executive who could replace the CEO. The activist also wants the company to drop the lawsuit where it is asking a federal appeals court to overturn Biden’s decision to scuttle the $14.9 billion deal.
By pursuing the lawsuit, U.S. Steel is hurting shareholders, Ancora argued in the letter, noting it wants management and the board to concentrate on fixing the business.
“In continuing to litigate the Petition for Review, the Board wastes money and resources in the desperate hope that (the) Merger will land them significant personal benefits,” the letter said.
Ancora has given the company until February 24 to provide it with typically confidential documents related to the proposed merger with Nippon and Burritt’s trading plan, according to the letter.
