ArcelorMittal, the world's largest steel producer, has entered into a definitive agreement with Cleveland-Cliffs, pursuant to which Cleveland-Cliffs will acquire 100% of the shares of ArcelorMittal USA for a combination of cash and stock.
Under the terms of the agreement, ArcelorMittal expects to receive an aggregate equity value consideration of $1.4 billion upon closing of the transaction. Approximately one third of the consideration is in upfront cash ($505 million). The remaining two thirds of the consideration is in the form of equity, a statement said.
The deal will make Cleveland-Cliffs the largest flat-rolled steel producer in North America, with combined shipments of around 17 million tonnes in 2019. The company will also be the largest iron ore pellet producer in North America, with 28 million long tons of annual capacity.
The combined company is expected to generate an estimated $150 million of annual cost synergies.
This transaction repositions ArcelorMittal’s platform in North America which will continue to service its clients through its strategic assets in Canada, Mexico and AM/NS Calvert in the US, the company said.
ArcelorMittal will retain its R&D programme and innovation centres to maintain its product and process development that underpins its leadership position.
ArcelorMittal intends to redistribute $500 million of the cash proceeds to shareholders through a share buyback programme.
The buyback programme will commence with effect from today and comply with purchase price rules as per the company’s share buyback mandate.
Lakshmi Mittal, Chairman and CEO, ArcelorMittal, said: “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. I would like to thank all employees of ArcelorMittal USA for their hard work in ensuring the business maintained its reputation as a trusted, quality supplier of steels for American manufacturing. I am confident you will have a bright future with Cleveland-Cliffs.” - TradeArabia News Service