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Researched by Industrial Info Resources (Sugar Land, Texas)--Iron-ore-pellets-producer Cleveland-Cliffs Incorporated (NYSE:CLF) (Cleveland, Ohio) plans to acquire steel products producer AK Steel Holding Corporation (NYSE:AKS) (West Chester, Ohio) next year to create a vertically integrated iron ore and steel firm, the two companies announced Tuesday. Combined, the two companies have more than $1.5 billion in project activity being tracked by Industrial Info, along with 18 U.S. plants.
Cleveland-Cliffs plans to acquire AK Steel in a stock deal valued at about $1.1 billion. AK Steel shareholders will receive 0.4 shares of Cleveland-Cliffs common stock for each share of AK Steel common stock, at a 16% premium based on the closing share prices of the two companies as of December 2.
Cleveland-Cliffs touts itself as the world's largest producer of iron ore pellets, while AK Steel produces flat-rolled carbon, stainless and electrical steel products, primarily for the automotive industry. Lourenco Goncalves, Cleveland-Cliffs' outspoken chief executive officer, will remain the head of the company.
"The combined company will ensure (iron ore) pellet volume commitments to AK Steel's blast furnaces along with (Cleveland-Cliffs') Toledo hot briquetted iron facility, to complement its existing long-term minimum volume pellet offtake agreements with other key integrated steel producers," the companies said in a joint press release.
"Further, the potential startup of pig iron manufacturing at AK Steel's facility in Ashland, Kentucky, would create future opportunities for pellet demand and more metallics products without significant additional capital expenditures," the companies said. AK Steel had earlier decided to permanently shut down its Ashland steel mill, which has been mostly idled.
AK Steel reported just $2.8 million in net income for the third quarter, compared with $67.2 million for third-quarter 2018. Net sales fell 12% in this period primarily due to a sharp drop in carbon spot market prices and reduced shipments to the distributors and converters market, the company said.
AK Steel Chief Executive Officer Roger Newport, who will retire following the acquisition, said in Tuesday's press release that under the deal with Cleveland-Cliffs, "Our shareholders will benefit from exposure to a larger, more diversified company that is better positioned to capitalize on growth opportunities."
Industrial Info is tracking AK Steel projects with a combined value of more than $200 million. This includes the company's plans to rebuild the 6,000-ton-per-day Blast Furnace "C" at its Dearborn Steel Works in Michigan in order to return the furnace to optimum performance. Construction is planned to kick off in mid-2022, with completion later that year. For more information, see Industrial Info's project report.
Industrial Info also is tracking four active Cleveland-Cliffs projects worth $1.31 billion. The company aims to begin commercial production at its new hot-briquetted iron (HBI) plant in Ohio in mid-2020. Groundbreaking for the plant took place in April 2018. Located at the Port of Toledo, the plant will produce 1.6 million metric tons per year of HBI for electric arc furnace (EAF) steelmakers in the Great Lakes region. Cleveland-Cliffs estimates the Great Lakes market at 3 million metric tons per year. That market has been supplied by imported commercial-grade pig iron and HBI, according to the company. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Cleveland-Cliffs plans to acquire AK Steel in a stock deal valued at about $1.1 billion. AK Steel shareholders will receive 0.4 shares of Cleveland-Cliffs common stock for each share of AK Steel common stock, at a 16% premium based on the closing share prices of the two companies as of December 2.
Cleveland-Cliffs touts itself as the world's largest producer of iron ore pellets, while AK Steel produces flat-rolled carbon, stainless and electrical steel products, primarily for the automotive industry. Lourenco Goncalves, Cleveland-Cliffs' outspoken chief executive officer, will remain the head of the company.
"The combined company will ensure (iron ore) pellet volume commitments to AK Steel's blast furnaces along with (Cleveland-Cliffs') Toledo hot briquetted iron facility, to complement its existing long-term minimum volume pellet offtake agreements with other key integrated steel producers," the companies said in a joint press release.
"Further, the potential startup of pig iron manufacturing at AK Steel's facility in Ashland, Kentucky, would create future opportunities for pellet demand and more metallics products without significant additional capital expenditures," the companies said. AK Steel had earlier decided to permanently shut down its Ashland steel mill, which has been mostly idled.
AK Steel reported just $2.8 million in net income for the third quarter, compared with $67.2 million for third-quarter 2018. Net sales fell 12% in this period primarily due to a sharp drop in carbon spot market prices and reduced shipments to the distributors and converters market, the company said.
AK Steel Chief Executive Officer Roger Newport, who will retire following the acquisition, said in Tuesday's press release that under the deal with Cleveland-Cliffs, "Our shareholders will benefit from exposure to a larger, more diversified company that is better positioned to capitalize on growth opportunities."
Industrial Info is tracking AK Steel projects with a combined value of more than $200 million. This includes the company's plans to rebuild the 6,000-ton-per-day Blast Furnace "C" at its Dearborn Steel Works in Michigan in order to return the furnace to optimum performance. Construction is planned to kick off in mid-2022, with completion later that year. For more information, see Industrial Info's project report.
Industrial Info also is tracking four active Cleveland-Cliffs projects worth $1.31 billion. The company aims to begin commercial production at its new hot-briquetted iron (HBI) plant in Ohio in mid-2020. Groundbreaking for the plant took place in April 2018. Located at the Port of Toledo, the plant will produce 1.6 million metric tons per year of HBI for electric arc furnace (EAF) steelmakers in the Great Lakes region. Cleveland-Cliffs estimates the Great Lakes market at 3 million metric tons per year. That market has been supplied by imported commercial-grade pig iron and HBI, according to the company. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
