Ashland steel plant could startup again after $1 billion merger

Ashland steel plant could startup again after $1 billion merger

Ashland steel plant could startup again after $1 billion merger

It is an all-stock deal valued at $1.1 billion.

Current AK Steel stockholders will receive.40 shares of Cliffs common stock for each outstanding share of AK Steel common stock they own, or $3.36 per share under the pact, which is subject to the approval of shareholders in both companies and regulatory approvals.

The payment ratio implies a cash price of $3.36 per share of AK Steel, a premium of 16% to the steelmaker's closing price on Monday.

Cleveland-Cliffs, North America's largest producer of iron ore pellets, and AK Steel, a leading producer of innovative flat-rolled carbon and stainless-steel products, have announced that they have entered into a definitive merger agreement, according to a release from Cliffs Inc.

AK Steel will become a subsidiary of Cliffs and keep its branding and corporate identity.

Goncalves will head the combined company and AK Steel CEO Roger Newport will retire. Three AK Steel board members will join the Cliffs board, and two Cliffs board members will step down. "Our shareholders will benefit from exposure to a larger, more diversified company that is better positioned to capitalize on growth opportunities".

The merger solidifies the demand for Cliffs' pellets, the release states.

Cleveland-Cliffs' history dates back to 1847. Next year Cliffs is set to complete its new $700 million hot-briquetted iron plant in Toledo, Ohio. Cliffs will remain listed on the New York Stock Exchange.

"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. AK Steel, located in West Chester, in Greater Cincinnati, has approximately 9,500 employees in operations in Mexico, U.S. and Canada. It has plants across Kentucky, Pennsylvania, Ohio, Michigan and Indiana.

The transaction is expected to close in the first half of 2020.

Since May of 2008, when AK Steel posted an all-time high share price of around $73, shares have lost more than 90% of their value, with the biggest drop occurring by November of 2008.

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