Published: October 9, 2020 |

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Cleveland-Cliffs has entered into a definitive agreement with ArcelorMittal S.A., to which Cleveland-Cliffs will acquire substantially all of the operations of ArcelorMittal USA and its subsidiaries or approximately $1.4 billion. Upon closure of the transaction, Cleveland-Cliffs will be the largest flat-rolled steel producer in North America, with combined shipments of approximately 17 million net tons in 2019. The company will also be the largest iron ore pellet producer in North America, with 28 million long tons of annual capacity.

ArcelorMittal USA will be acquired by Cleveland-Cliffs on a cash-free and debt-free basis, with a combination of 78.2 million shares of Cleveland-Cliffs common stock, non-voting preferred stock with an approximate aggregate value of $373 million, and $505 million in cash. The enterprise value of the transaction is approximately $3.3 billion, which takes into consideration the assumption by Cleveland-Cliffs of pension/OPEB liabilities and working capital.

In 2018 and 2019, ArcelorMittal USA averaged annual revenues of approximately $10.4 billion and annual adjusted EBITDA of approximately $700 million. The assets acquired include 6 steelmaking facilities, 8 finishing facilities, 2 iron ore mining and pelletizing operations, and 3 coal and cokemaking operations.

Lourenco Goncalves, chairman of the board, president, and CEO of Cleveland-Cliffs, will lead the expanded organization.

“Steelmaking is a business where production volume, operational diversification, dilution of fixed costs, and technical expertise matter above all else, and this transaction achieves all of these. ArcelorMittal is a world class organization that we have long admired as our customer and our partner, and we know for a fact that they have taken good care of their US assets,” said Lourenco Goncalves, chairman of the board, president, and CEO of Cleveland-Cliffs.

“We look forward to welcoming the ArcelorMittal USA team into our organization. We are creating an exceptional company, based on great people and supported by our existing strong relationship with the United Steelworkers, the United Auto Workers, and the Machinists unions. The acquisition of ArcelorMittal USA amplifies our position in the discerning automotive steel marketplace, and further improves our position in important U.S. markets such as construction, appliances, infrastructure, machinery and equipment,” added Goncalves.

“It also adds to our strong legacy raw material profile and growing finishing capabilities. The transaction will enable us to become a more efficient fully-integrated steel system, with the ability to realize all of our operational and financial goals,” said Goncalves.

Transaction Rationale
• Combined innovation capabilities with world-class expertise in iron ore pellets, HBI and steel
• Furthers commitment to environmentally and socially conscious steelmaking with self-sufficiency in HBI and
  pellets
• Improves operational capabilities, flexibility, and steelmaking cost performance
• Asset locations consistent with Cleveland-Cliffs’ long-standing, U.S.-centric strategy
• Increased exposure to highly desirable automotive end market
• Fully-integrated system delivers improved through-the-cycle margins
• Deleveraging transaction creates a more resilient, pro-forma balance sheet
• Highly synergistic transaction with clear line of sight to achievement of approximately $150 million of estimated
  annual cost savings
• Substantial asset base increases liquidity and secured borrowing availability
• Enhances optionality for future production of merchant pig iron

Assets Acquired
• Steelmaking:
Indiana Harbor, Burns Harbor, Cleveland, Coatesville, Steelton, Riverdale

• Finishing:
Columbus, Conshohocken, Double G. Coatings JV (ArcelorMittal USA’s 50 percent interest), Gary Plate, I/N Tek JV with Nippon Steel (ArcelorMittal USA’s 60 percent interest), I/N Kote JV with Nippon Steel (ArcelorMittal USA’s 50 percent interest), Piedmont, Weirton

• Mining and Pelletizing:
Hibbing JV (ArcelorMittal USA’s 62.3 percent interest), Minorca

• Met Coal / Cokemaking:
Monessen, Princeton, Warren

About Cleveland-Cliffs Inc.
Founded in 1847, Cleveland-Cliffs is among the largest vertically integrated producers of differentiated iron ore and steel in North America. With an emphasis on non-commoditized products, the company is uniquely positioned to supply both customized iron ore pellets and steel solutions to a quality-focused customer base. AK Steel, a wholly-owned subsidiary of Cleveland-Cliffs, is a leading producer of flat-rolled carbon, stainless and electrical steel products. The AK Tube and Precision Partners businesses provide customer solutions with carbon and stainless steel tubing products, die design and tooling, and hot- and cold-stamped components. In 2020, Cliffs also expects to be the sole producer of hot briquetted iron (HBI) in the Great Lakes region. Headquartered in Cleveland, Ohio, Cleveland-Cliffs employs approximately 11,000 people across mining and steel manufacturing operations in the United States and Canada.

To stop by Cleveland-Cliffs’ website, CLICK HERE

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