Cleveland-Cliffs Inc. buys US operations of ArcelorMittal SA for $ 1.4 billion, making it the largest flat steel producer in North America.
According to a press release from Cleveland-Cliffs, it plans to pay for the acquisition of ArcelorMittal USA with its own shares in the amount of $ 873 million and in cash in the amount of $ 505 million.
In addition, Cleveland-Cliffs will take on itself debt to ArcelorMittal USA in the amount of about $ 500 million, as well as pension liabilities in the amount of $ 1.5 billion. Taking this into account, the value of ArcelorMittal USA under the transaction is estimated at $ 3.3 billion.
The assets to be acquired include six steel enterprises, capacities for the production of steel billets, as well as mining enterprises. In 2018-2019. ArcelorMittal USA had an average revenue of $ 10.4 billion, Adjusted EBITDA of $ 700 million.
The deal was approved by the boards of directors of both companies and is expected to close in the fourth quarter of 2020 if approved by the respective regulators.
For Cleveland-Cliffs, this is the second major acquisition in less than a year: in March it bought the American steel company AK Steel for $ 1.1 billion.
ArcelorMittal said on Monday that it will spend $ 500 million to buy back its own shares, which will begin immediately.
In July, the company announced that it is considering the possibility of “structural changes” in American business amid the coronavirus pandemic. Earlier this year, ArcelorMittal waived dividend payments and set a goal of selling $ 2 billion in assets to raise funds to reduce debt.
ArcelorMittal shares soared 10% in trading on Monday. Since the beginning of this year, their value has decreased by 27%.
Cleveland-Cliffs has risen in price by 6.1% during preliminary trading, their value has fallen by 30% this year.