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Steelmaker Cleveland-Cliffs (CLF), a big customer of Norfolk Southern (NYSE:NSC), came out in support of activist Ancora Holdings in its proxy battle with the railroad company.
“As one of the largest customers of Norfolk Southern as well as a meaningful supplier of steel rails, I am writing to express my support in your current proxy fight with Norfolk Southern,” Cliffs CEO Lourenco Goncalves wrote in a letter to Ancora on Saturday.
Ancora, which has amassed a $1B stake in NSC, has been engaged in a proxy fight since February to oust CEO Alan Shaw and install former UPS (UPS) COO Jim Barber as the company’s CEO and former CSX executive Jamie Boychuk as COO. Ancora has also outlined a three-year plan to cut costs.
“As a matter of fact, the success Cleveland-Cliffs has enjoyed during the last ten years would be impossible if not for the successful activist campaign we waged and won in 2014 against an entrenched board,” Goncalves wrote in the letter that was viewed by Seeking Alpha. “We believe in shareholder activism when the activist has a plan and knows how to execute the plan. That seems to be the case of your current effort, and therefore you have my support.”
The Cliffs (CLF) support comes after a railroad workers’ union, the Brotherhood of Locomotive Engineers and Trainmen, on Friday said it was in favor of ousting Norfolk Southern’s (NSC) management, backing a campaign by Ancora to add seven directors to the board and change the direction of the railroad operator.
This leaves union support split, with the American Federation of Labor and Congress of Industrial Organization, backing management over Ancora amid fears that Ancora’s plan would lead to unsafe understaffing at the railroad.
The proxy vote is set for May 9.
