Cleveland-Cliffs to buy AK Steel for $1.1bn
US iron ore miner Cleveland-Cliffs said on Tuesday that it had agreed to buy steelmaker AK Steel for $1.1bn in shares.
AK Steel Holding Corp.
$0.00
14:25 11/03/24
Cliffs Natural Resources Inc.
$18.23
11:10 25/04/24
Under the terms of the deal, AK Steel shareholders will receive 0.40 Cleveland shares for each of their shares, or $3.36 per share. Cliffs shareholders will own about 68% of the enlarged company, while AK steel shareholders will own the rest.
The transaction is expected to generate $120m in annual cost synergies. Lourenco Goncalves, the chief executive officer of Cliffs, will head up the new company.
Cliffs said that together, the two will have a presence across the entire manufacturing process, from mining to pelletizing to the development and production of finished high value steel products, including Next Generation Advanced High Strength Steels for automotive and other markets.
Goncalves said: "By combining the best-in-class quality of AK Steel’s assets and its enviable product mix with Cliffs’ debt profile and proven management team, we are creating a premier North American company, self-sufficient in iron ore pellets and geared toward high value-added steel products.
“The pro forma Cliffs will be a vertically integrated steel company that is expected to drive improved profitability for existing Cliffs and AK Steel shareholders and is well-positioned to serve both the blast furnace and electric arc furnace segments."