Cliffs is North America's largest producer of iron ore pellets, and AK Steel is a producer of flat-rolled carbon, stainless, and electrical steel products.
A merger agreement between Cleveland-Cliffs Inc. and AK Steel means Cliffs has acquired all of the issued and outstanding shares of AK Steel common stock.
"We believe this transaction is a compelling opportunity for AK Steel shareholders to participate in the substantial upside potential of what will be a premier vertically integrated producer of value-added iron ore and steel products with significant scale and diversification".
Cleveland-Cliffs is buying AK Steel in a stock deal valued at about $1.1 billion. Once the merger is complete, Cliffs shareholders will own 68% of the combined company, and AK Steel shareholders will own 32%, according to a news release.
Goncalves will lead the combined company. Following the completion of the deal, AK Steel will become a wholly owned, direct subsidiary of Cliffs and retain its own branding and corporate identity. "Our shareholders will benefit from exposure to a larger, more diversified company that is better positioned to capitalize on growth opportunities".
WSAZ reports the merger could create work at the idle AK Steel plant in Ashland. The company supplies iron ore pellets to the North American steel industry from its mines and pellet plants in MI and Minnesota.
The company has about 9,500 employees at operations in the U.S., Canada and Mexico, along with facilities in Western Europe, the release states.
"Together, Cliffs and AK Steel will have a presence across the entire manufacturing process, from [iron ore] mining to pelletizing to the development and production of finished, high-value steel-products, including "Next Generation" advanced high strength steels for automotive and other markets", Cliffs officials said in a statement. It has plants across Kentucky, Pennsylvania, Ohio, Michigan and Indiana. The deal is expected to close in the first half of 2020, subject to shareholder approval.
The fixed exchange ratio implies $3.36 per share of AK Steel common stock and represents a premium of roughly 16% based on the closing share prices of Cliffs and AK Steel as of December 2, 2019.