US-based mining and natural resources company Cleveland-Cliffs Inc. announced that it will acquire ArcelorMittal USA LLC and its subsidiaries for approximately $1.4 billion. With this acquisition, Cleveland-Cliffs will be the largest flat rolled and iron ore pellet producer in North America.
According to the company’s statement, 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-voting preferred stock with an approximate aggregate value of $373 million, and $505 million in cash. The transaction will allow cost savings of approximately $150 million annually and will increase liquidity.
“We look forward to welcoming the ArcelorMittal USA team into our organization. We are creating an exceptional company. The acquisition of ArcelorMittal USA amplifies our position in the discerning automotive steel 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 all of our operational and financial goals,” Lourenco Goncalves, CEO of Cleveland-Cliffs said.
Meanwhile, ArcelorMittal said that they will continue to serve in North America through its assets in Canada, Mexico and AM/NS Calvert in the US. Dofasco and ArcelorMittal Mexico are amongst the lowest cost producers in the region, while AM/NS Calvert intends to construct an electric arc furnace to optimize its slab sourcing.