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Steel News July 23, 2014 06:36:53 AM

AK Steel to Buy Dearborn Steel Plant for $700 million

Paul Ploumis
ScrapMonster Author
AK Steel Corporation has inked a deal to purchase the Dearborn integrated steel producing assets of Severstal North America for about $700 million.
AK Steel to Buy Dearborn Steel Plant for $700 million

WASHINGTON (Scrap Monster): AK Steel Corporation has inked a deal to purchase the Dearborn integrated steel producing assets of Severstal North America for about $700 million. The purchase deal also includes a coke manufacturing unit and interests in three joint ventures which produces flat-rolled steel products.

The company will close the takeover in 2014 fourth quarter after getting regulatory approvals. The deal is supported fully by a bridge financing facility from Credit Suisse. The company will finance the acquisition through a debt and equity securities.

Through this purchase, the AK steel will be benefited in many ways. The Dearborn integrated steelmaking plant is situated close to many of the company’s customers. Assets and facilities of the Dearborn unit enable to develop its present carbon steel operations.

Through this acquisition, AK steel will get highly modernized steel making infrastructure and equipments. This will increase the company’s operational efficiency and profit.

This enables the company to save purchasing costs, transportation and overhead costs. The company anticipated the cost synergies of about $50 million, with approximately $25 million realized in the period of full year which follows the closing of acquisition.

Dearborn Steel unit also produced hot and cold rolled sheet as AK steel. Dearborn also manufactures hot dip galvanized product and flat rolled steel products.

AK steel is planning to utilize all the production units of Dearborn, which has the production capacity of about 2.5 million tonnes of finished steel products annually. After the completion of the acquisition, AK steel anticipates that its shipments per year to go beyond 7.5 million tonnes.

 

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