The deal, announced Monday morning, includes more than 25 facilities, mines, steelmaking facilities, and other operations. ArcelorMittal, the largest steel manufacturer in North and South America, employs more than 18,000 people in America, according to the company.
The deal will make Cleveland-Cliffs the largest flat-rolled steel producer in North America, Cleveland-Cliffs Chairman Lourenco Goncalves said Monday during a conference call.
Monday marked the first day in “a great chapter” in the company’s history, he said. The company was founded in 1847.
AK Steel started operations in 1901 in Middletown and always has been a major contributor to the community. The company opened its $36 million AK Steel Research and Innovation Center off Interstate 75 in 2017, 10 years after the headquarters were moved out of Middletown to West Chester.
There are soccer fields and a band shelter named after AK Steel in Middletown and the company is a major supporter of Light Up Middletown, a holiday lights display; and employees serve on numerous boards and employees volunteer on countless projects.
Rick Pearce, a lifetime Middletown resident and president of the Chamber of Commerce serving Middletown, Monroe and Trenton, said AK Steel and its predecessor companies have always “played an important role” in Butler County.
“It’s too difficult to account for the ancillary businesses and the jobs that were created that have serviced the mill, not to mention the manufacturing facilities that were attracted to the area because of the close proximity to steel.” he said. “AK has definitely had a positive impact on the development of Butler County.”
When asked if he has seen any change in community involvement since AK Steel was purchased by Cleveland-Cliffs in March, Pearce it’s hard to gauge because COVID-19 has impacted all community involvement.
Aditya Mittal, president of ArcelorMittal, said the deal presents “a unique opportunity" to create a competitive and resilient company with considerable synergy potential.
“Steelmaking is a business where production volume, operational diversification, dilution of fixed costs, and technical expertise matter above all else,” Goncalves said in a statement. “This transaction achieves all of these.”
Under the deal, which is expected to close during the fourth quarter, Cleveland-Cliffs will pay nearly $900 million in stock and about $500 million in cash, Goncalves said.
Although the acquisition won’t include any debt from the U.S. operations of ArcelorMittal, Cleveland-Cliffs will assume pension and other liabilities, bringing the total value of the deal to about $3.3 billion.
Shares of Cleveland-Cliffs and ArcelorMittal rose by around 10 percent in the first 30 minutes of trading on Monday.
In February, AK Steel’s fourth-quarter earnings arrived below expectations. It reported a fourth-quarter loss of $53.9 million, after reporting a profit of $33.5 million in the same period a year earlier.
The steel producer posted revenue of $1.45 billion in the period, which missed Wall Street forecasts. Four analysts surveyed by investment research firm Zacks expected $1.48 billion.
Profitability decline was attributable “primarily to the General Motors strike, and higher costs for iron ore, coal and coke during the current year fourth quarter,” according to the company.
About the Author