Iron ore and steel producer Cleveland-Cliffs Inc. will acquire ArcelorMittal USA and its subsidiaries in a deal valued at approximately $1.4 billion, both companies announced Monday morning.
The acquisition comprises six steel-making facilities, eight finishing facilities, two iron ore mining and pelletizing operations, and three coal and coke-making operations.
Cleveland-Cliffs said the deal will make it the largest flat-rolled steel producer in North America, with shipments of approximately 17 million net tons in 2019.
ArcelorMittal USA had revenue of $9.9 billion in 2019, the company said.
Lourenco Goncalves, chairman, president and CEO of Cleveland-Cliffs, will lead the expanded organization. He said in a statement: “Steelmaking is a business where production volume, operational diversification, dilution of fixed costs, and technical expertise matter above all else, and this transaction achieves all of these.”
Cleveland-Cliffs will finance the deal through a combination of cash and stock shares, including $505 million in cash. Additionally, Cleveland-Cliffs will assume liabilities of ArcelorMittal USA, including pensions and other post-employment benefit liabilities. Cleveland-Cliffs placed the enterprise value of the transaction at about $3.3 billion, including the assumption of the liabilities.
“Combining these two companies, which have enjoyed a long and strong supplier/customer relationship, is a unique opportunity to create a competitive and resilient company with considerable synergy potential,” said Aditya Mittal, Arcelor president and CFO, said in a statement: As a result, this transaction offers compelling value proposition with further upside potential. The transaction also completes our $2 billion asset portfolio optimization target and enables us to return cash to shareholders.”
Boards of directors at both companies have approved the transaction. The deal is expected to close in the fourth quarter of 2020, subject to regulatory and other closing conditions.