Cleveland-Cliffs Backs Activist Ancora in Proxy Battle Cleveland-Cliffs Backs Activist Ancora in Proxy Battle

Written By Michael Gary Scott

Industry Allies Unite

Steel giant Cleveland-Cliffs has thrown its considerable weight behind activist investor Ancora Holdings in a high-stakes proxy battle against railroad heavyweight Norfolk Southern. The move amplifies the already intense showdown unfolding in the corporate arena, pitting entrenched management against a tide of change.

Show of Endorsement

In a bold gesture of support, Cleveland-Cliffs CEO, Lourenco Goncalves, penned a letter to Ancora over the weekend, endorsing their cause. Goncalves highlighted Cleveland-Cliffs’ significant business ties with Norfolk Southern, underlining the strategic importance of the activist campaign in reshaping the railroad company’s future.

Activist Pursuit

Ancora Holdings, holding a formidable $1 billion stake in Norfolk Southern, has been waging an aggressive proxy fight since February. The goal: to dethrone current CEO Alan Shaw and usher in a new leadership era led by industry veterans such as former UPS COO Jim Barber and ex-CSX executive Jamie Boychuk. Ancora’s battle cry resonates with a three-year plan focused on slashing costs and revamping operations.

A History Lesson

Goncalves drew a parallel to Cleveland-Cliffs’ own successful activist campaign in 2014, emphasizing the pivotal role such movements can play in driving corporate change. The CEO noted that the path to Cleveland-Cliffs’ decade of prosperity was paved by a previous activist victory, underscoring the transformative potential inherent in shareholder activism.

Union Divide

The rift in support for Ancora’s cause was further laid bare as a key railroad workers’ union, the Brotherhood of Locomotive Engineers and Trainmen, threw its weight behind the activist camp on Friday. This showed a palpable split in union alliances, with the American Federation of Labor and Congress of Industrial Organization voicing concerns about Ancora’s proposed changes, fearing potential risks of understaffing at Norfolk Southern.

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Upcoming Showdown

The stage is now set for a climactic proxy vote scheduled for May 9. As tensions simmer and battle lines are drawn, the corporate landscape braces for a potentially seismic shift in power dynamics at Norfolk Southern.