Cleveland-Cliffs Inc. and AK Steel, a leading producer of flat-rolled carbon, stainless and electrical steel products, entered into a definitive merger agreement pursuant to which Cliffs will 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 to create a vertically integrated producer of value-added iron ore and steel products. The combined company will be ideally positioned to provide high-value iron ore and steel solutions to customers primarily across North America. Lourenco Goncalves, chairman of the board, president and CEO of Cliffs, will lead the expanded organization.
The combination will create significant opportunities to generate additional value from market trends across the entire steel value chain. The integrated supply chain provides AK Steel self-sufficiency in iron ore supply. Together, Cliffs and AK Steel will have a presence across the entire manufacturing process, from mining to pelletizing to the development and production of finished high-value steel products, including advanced high-strength steels for automotive and other markets.
The combined company will also ensure pellet volume commitments to AK Steel’s blast furnaces along with Cliffs’ Toledo hot briquetted iron (HBI) facility. In addition, the potential start-up of pig-iron manufacturing at AK Steel’s facility in Ashland, Ky., would create future opportunities for pellet demand and more metallics products without significant additional capital expenditures.
The transaction is expected to close in the first half of 2020.