Cleveland-Cliffs Inc. plans to buy all of the issued and outstanding shares of AK Steel Holding Corp.’s common stock. Upon completion of the transaction, valued at approximately $1.1 billion, Cliffs shareholders will own approximately 68% and AK Steel shareholders will own approximately 32% of the combined company.
Lourenco Goncalves, chairman of the board, president and CEO of Cliffs, will lead the expanded organization.
“We are excited to be able to deliver real value to the shareholders of both Cliffs and AK Steel through a value enhancing and leverage-neutral transaction,” 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 transaction will combine Cliffs, North America’s largest producer of iron ore pellets, with AK Steel, a leading producer of innovative flat-rolled carbon, stainless and electrical steel products, to create a vertically integrated producer of value-added iron ore and steel products. The combined company will be well-positioned to provide high-value iron ore and steel solutions to customers primarily across North America.
“We believe this transaction is a compelling opportunity for AK Steel shareholders to participate in the substantial upside potential of what will be a premier vertically integrated producer of value-added iron ore and steel products with significant scale and diversification,” CEO of AK Steel Roger K. Newport said. “Our shareholders will benefit from exposure to a larger, more diversified company that is better positioned to capitalize on growth opportunities.”
The transaction is expected to close in the first half of 2020.