Big River Steel announced today it has entered into an agreement with United States Steel Corporation in which Big River will receive $700 million in cash in return for a minority ownership interest in its scrap recycling and steel production company.
Under the terms of the transaction, which assumes a $2.325 billion enterprise value, the companies will form a joint venture under which US Steel will hold a 49.9 percent ownership interest. As part of its investment, US Steel will hold an option to acquire the remaining 50.1 percent. Big River Steel's original owners will also hold certain options related to the future ownership make up of Big River Steel should US Steel choose not to exercise its option.
Additionally, Big River has started construction on a project that will double the company’s production capacity from 1.65 million tons to 3.3 million tons of flat-rolled steel. This investment will facilitate the company's ability to produce even higher grades of electrical steel, demand for which is expected to increase with continued focus on energy efficiency and the increase in hybrid and electric vehicle sales.