Cleveland-Cliffs reaches $1.4B agreement to acquire ArcelorMittal USA

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mergers and acquisitions

Michail Petrov/Adobe Stock

Cleveland-Cliffs Inc. has reached an agreement to acquire ArcelorMittal USA, the former announced Monday morning.

Cliffs will acquire ArcelorMittal USA for approximately $1.4 billion.

The deal is expected to close in the fourth quarter, “subject to the receipt of regulatory approval and the satisfaction of other customary closing conditions.”

Cleveland-Cliffs (CLF) shares closed today at $6.56, up 11.6%.

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Cleveland-Cliffs to become No. 1 flat-rolled steel producer in North America

With the acquisition, Cliffs will become the largest flat-rolled steel producer in North America.

Furthermore, the company will also become the largest iron ore pellet producer, boasting 28 million long tons of annual capacity.

“Steelmaking is a business where production volume, operational diversification, dilution of fixed costs, and technical expertise matter above all else, and this transaction achieves all of these,” said Lourenco Goncalves, president, CEO and chairman of the board at Cleveland-Cliffs. “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 US assets.”

Steelmaking operations

So, which facilities will move under the Cleveland-Cliffs banner?

In terms of steelmaking enterprises, the acquisition includes the following ArcelorMittal locations:

  • Indiana Harbor
  • Burns Harbor
  • Cleveland
  • Coatesville
  • Steelton
  • Riverdale

The Indiana Harbor plant is the largest fully integrated steelmaking facility in North America, with 7.4 million tons of annual steelmaking capacity.

As for finishing operations, the deal includes:

  • Columbus
  • Conshohocken
  • Double G. Coatings JV (ArcelorMittal USA’s 50% interest)
  • Gary Plate
  • I/N Tek JV with Nippon Steel (ArcelorMittal USA’s 60% interest)
  • I/N Kote JV with Nippon Steel (ArcelorMittal USA’s 50% interest)
  • Piedmont
  • Weirton

Furthermore, the deal also includes two ArcelorMittal mining and pelletizing plants and three metallurgical coal/cokemaking facilities.

In its own statement, ArcelorMittal USA touted the benefits of the deal, namely pointing to the “favourable valuation achieved for ArcelorMittal USA due to the high synergistic potential of the combined company.”

“This transaction is a unique opportunity for ArcelorMittal to unlock significant value for shareholders while retaining exposure to the North American economy through our high-quality NAFTA assets alongside a participation in what will be a stronger, better integrated, US business,” ArcelorMittal President and CEO Lakshmi Mittal said.

Making deals

The latest acquisition is yet another in what has been a busy year for Cleveland-Cliffs on the M&A trail.

In March, Cleveland-Cliffs completed the acquisition of AK Steel.

“This is a new era for Cleveland-Cliffs as a producer of differentiated, high quality iron ore, metallics and steel in North America,” Goncalves said in a release dated March 13, 2020. “The new Cliffs will begin from a unique position of strength in our industry, with a dynamic combination of assets including two efficient integrated blast furnace steel mills, two electric arc furnace plants, a new state-of-the-art HBI plant and several other highly technologically developed facilities. We will be catering to a desirable customer base and primarily doing business in the United States, the most resilient manufacturing economy in the world.”

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