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Steel News December 04, 2019 08:30:10 AM

AK Steel Reaches Buyout Deal with Cleveland-Cliffs

Paul Ploumis
ScrapMonster Author
The transaction is expected to come to a close in H1 2020.
AK Steel Reaches Buyout Deal with Cleveland-Cliffs

SEATTLE (Scrap Monster): West Chester, Ohio-based AK Steel Holding Corporation and Cleveland-headquartered Cleveland-Cliffs, Inc. have announced that they have entered into definitive merger agreement. As per agreement, Cleveland-Cliffs will acquire all of the issued and outstanding shares of AK Steel. The merged entity will be led by Lourenco Goncalves, President and CEO of Cleveland-Cliffs.

The joint press release states that shareholders of AK Steel will receive 0.40 shares of Cliffs common stock for each outstanding share of AK Steel common stock owned by them. Upon completion of the proposed merger transaction, nearly 68% of the ownership of the combined entity will be owned by Cliffs shareholders, whereas the remaining around 32% of the combined company will be owned by AK Steel shareholders.

ALSO READ: AK Steel's Profits Soared 18% in Second Quarter 2019

The transaction is expected to create a vertically-integrated producer of value-added iron ore and steel products, serving customers primarily across the entire North American region.

Commenting on the development, Mr. Goncalves noted that the merger provides possibility to pursue additional growth opportunities, including the potential future utilization of the Ashland blast furnace to produce high-quality merchant pig iron. Meantime, Roger K. Newport, CEO of AK Steel said that the combination of Cliffs’ iron ore pellet capabilities and its innovative steel production capabilities is strategically compelling.

The transaction is expected to come to a close in H1 2020, subject to approval by Cliffs and AK Steel shareholders, regulatory approvals and other customary closing conditions.

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