Cleveland-Cliffs Inc. and AK Steel Holding Corporation announced today that they have entered into a merger agreement that will see Cliffs acquire all of the issued and outstanding shares of AK Steel common stock.
The transaction will combine Cliffs, North America’s largest producer of iron ore pellets, with AK Steel, a leading producer of flat-rolled carbon, stainless and electrical steel products.
The combined company will be “ideally positioned to provide high-value iron ore and steel solutions” to customers primarily across North America, according to a statement issued today by Cleveland-Cliffs.
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,” Gonclaves said in the statement. “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.”
Following completion of the transaction, with Goncalves leading the expanded organization, Roger Newport will retire as CEO and a director of AK Steel. Three existing members of AK Steel’s Board of Directors will join the Cliffs Board, and two existing Cliffs Board members will step down, bringing the Cliffs Board to 12 members in total.
AK Steel will become a subsidiary of Cliffs and will retain its branding and corporate identity. Cliffs will continue to be listed on the NYSE with its headquarters in Cleveland, while maintaining “a significant presence” at AK Steel’s offices in West Chester Twp. along with its Research and Innovation Center in Middletown.
The transaction is expected to close in the first half of 2020, subject to approval by the shareholders of both companies, receipt of regulatory approvals and satisfaction of other customary closing conditions.
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