Al Root

United States Steel has become an unlikely darling, with many parties vying for control of the century-old-plus American icon.

The interest hasn't translated into significant gains for existing shareholders, though. Investors appear confused, and no one knows exactly how the U.S. Steel drama will end.

On Wednesday, Ancora, a Cleveland-based activist investor with about $10 billion in assets under management, held a conference call outlining its plan for the steel maker.

Ancora nominated a majority slate of directors on Jan. 27, making a play for control of the company. The call outlined a "multi-billion dollar capital investment plan to revitalize U.S. Steel," led by Alan Kestenbaum, former CEO of Canadian steel maker Stelco.

Kestenbaum reflected on his success in turning around Stelco, which was sold to Cleveland-Cliffs in 2024, adding he has a history of improving labor relations. Many U.S. Steel workers are represented by the United Steel Workers. U.S. Steel has a labor negotiation coming up in 2026.

Ancora, of course, wants U.S. Steel to abandon a proposed deal with Nippon Steel, which values U.S. Steel at $55 per share.

That deal faced stiff opposition from both sides of the political aisle, with President Donald Trump saying it was psychologically important for U.S. Steel to remain American-owned.

Control concessions by Nippon Steel and plans to invest billions didn't sway American politicians. President Trump did appear to soften his stance recently, saying at a press conference with Japanese Prime Minister Shigeru Ishiba that Nippon Steel would invest in U.S. Steel.

Nippon Steel and U.S. Steel declined multiple requests for comments about investment details.

The Nippon Steel deal emerged in late 2023 after Cleveland-Cliffs offered to buy U.S. Steel for about $35 a share in August 2023. Cleveland-Cliffs CEO Lourenco Goncalves hosted a combative January press conference where he indicated consolidation among large U.S. players could help restore consistent profitability to the sector.

Cleveland-Cliffs and America's largest steel producer, Nucor, are reportedly interested in some U.S. Steel assets. Nucor would be interested in U.S. Steel's electric arc furnace assets, which use electricity to melt scrap steel and other metallics.

Keeping track of things on the table: U.S. Steel could be sold to Nippon Steel, get an investment from Nippon Steel, be broken up into pieces, merge with Cleveland-Cliffs, or make a go of it as a standalone company investing in existing operations.

Investors are just waiting. U.S. Steel is down about 17% over the past 12 months, and the share price has bounced between roughly $30 and $40 since President Biden indicated he would block the deal in early 2024.

Ancora's main message was that U.S. Steel doesn't need external capital to turn around operations. "It's about brain power," said Kestenbaum. Time will tell if that's correct.

U.S. Steel looks like it could use capital. It's America's third-largest steel producer, and a relatively high-cost producer. Over the past few years, U.S. Steel and Cleveland-Cliffs made roughly $100 per ton in operating profit annually. Nucor earned close to three times that amount. Nippon Steel is the world's fourth-largest steel producer, and about three times the size of U.S. Steel, but its per-ton profit is closer to Cleveland-Cliffs and U.S. Steel than Nucor.

U.S. Steel shares weren't getting an Ancora boost. The stock was down 0.6% in midday trading at $38.04. The S&P 500 and Dow Jones Industrial Average were down 0.1% and 0.3%, respectively.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 19, 2025 11:21 ET (16:21 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.