Chesterton Tribune



Cleveland Cliffs Inc acquires ArcelorMittal USA

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Cleveland-Cliffs Inc. announced just before deadline today that it has entered into a definitive agreement with ArcelorMittal to acquire substantially all of the operations of ArcelorMIttal USA and its subsidiaries for approximately $1.4 billion.

On closure of this transaction, Cleveland-Cliffs will be the largest flat-rolled steel producer in North America, with combined shipments of approximately 17 million net tons in 2019. The company will also be the largest iron ore pellet producer in North America, with 28 million long tons of annual capacity.

“ArcelorMittal USA will be acquired by Cleveland-Cliffs on a cash-free and debt-free basis, with a combination of 78.2 million shares of Cleveland-Cliffs common stock, non-voted preferred stock with an approximate aggregate value of $373 million, and $505 million in cash,” Cleveland-Cliffs said. “The enterprise value of the transaction is approximately $3.3 billion, which takes into consideration the assumption by Cleveland-Cliffs of pension/OPEB liabilities and working capital.”

In 2018 and 2019, ArcelorMittal USA--which owns the Burns Harbor facility--averaged annual revenues of approximately $10.4 billion and annual adjusted EBITDA of approximately $700 million. The assets acquired include six steelmaking facilities, eight finishing facilities, two iron ore mining and pelletizing operations, and three coal and cokemaking operations.

“Steelmaking is a business where production volume, operational diversification, dilution of fixed costs, and technical expertise matter above all else,” Cleveland-Cliffs President, Chair, and CEO Lourenco Goncalves said. “ArcelorMittal is a world-class organization that we have long admired as our customer and our partner, and we know for a fact that they have taken good care of their U.S. assets.”

“We look forward to welcoming the ArcelorMIttal USA team into our organization,” Goncalves added. “We are creating an exceptional company, based on great people and supported by our existing strong relationship with the United Steelworkers, the United Auto Workers, and the Machinists unions. The acquisition of ArcelorMittal USA amplifies our position in the discerning automotive marketplace, and further improves our position in important U.S. markets such as construction, appliances, infrastructure, machinery, and equipment. It also adds to our strong legacy raw material profile and growing finishing capabilities. The transaction will enable us to become a more efficient fully-integrated steel system, with the ability to realize our operational and financial goals.”

The transaction has been approved by the board of directors of both companies and is expected to close in the fourth quarter 2020, subject to the receipt of regulatory approval and the satisfaction of other customary closing conditions.

Founded in 1847, Cleveland-Cliffs is among the largest vertically integrated producers of different iron ore and steel in North America. The company is headquartered in Cleveland, Ohio, and employs around 11,000 people across mining and steel manufacturing operations in the U.S. and Canada.


Posted 9/29/2020




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