CLEVELAND — Cleveland-Cliffs, North America’s largest producer of iron ore pellets, and AK Steel, a leading producer of innovative flat-rolled carbon and stainless-steel products, have announced that they have entered into a definitive merger agreement, according to a release from Cliffs Inc.
Founded in 1847, Cleveland-Cliffs is the largest and oldest independent iron ore mining company in the United States. AK Steel, located in West Chester, in Greater Cincinnati, has approximately 9,500 employees in operations in Mexico, U.S. and Canada.
Under the terms of the agreement, Cliffs will acquire all of the issued and outstanding shares of AK Steel common stock.
AK Steel shareholders will receive 0.40 shares of Cliffs common stock for each outstanding share of AK Steel common stock they own. Cliffs shareholders will own approximately 68% and AK Steel shareholders will own approximately 32% of the combined company.
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“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,” said Lourenco Goncalves, Chairman of the Board, President and CEO of Cliffs. “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 merger is expected to create additional value for shareholders, with $120 million in annual cost synergies.
“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. Our shareholders will benefit from exposure to a larger, more diversified company that is better positioned to capitalize on growth opportunities."
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