Cleveland-Cliffs and AK Steel Shareholder Partnership Deal approved

Cleveland-Cliffs Inc. and AK Steel Holding Company AKS have officially reported that Cleveland-Cliffs shareholders and AK Steel’s shareholders have approved in support of all the measures required to conclude the previously negotiated purchase of AK Steel at their respective special shareholder/stockholder meetings.

Cliffs is a significant source of iron ore pellets from its mines and pellet plants in Michigan and Minnesota, to the North American steel industry.

Cleveland-Cliffs would buy AK Steel under the Partnership Arrangement and prepare for the proposed contract. The firms also decided to authorize a fully owned subsidiary of Cleveland-Cliffs to combine with and into AK Steel. Post the deal, AK Steel will start activities as a Cleveland-Cliffs wholly-owned subsidiary.

Shareholder/stockholder voting outcomes are based on introductive tabulations issued by the impartial election auditor. The full result of the vote will be announced on behalf of Cleveland-Cliffs and AK Steel from a joint shareholder/stockholder conference on Form 8-K to be submitted with the US.

The business is currently scheduled to close on Mar 13, 2020, it is confirmed.

Cleveland-Cliffs reported in December 2019 that it had signed a binding acquisition deal to purchase all of AK Steel’s issued and unpaid common stock securities.

The deal unites North America’s largest iron ore pellets producer and a leading manufacturer of stainless steel, innovative flat-rolled carbon, and electrical steel products to form a vertically-integrated producer of value-added iron ore as well as steel products. AK steel also provides carbon and stainless steel tube materials, hot and cold pressed parts, and die modeling and tooling solutions to customers. The merged existence will be well placed to deliver high-value iron ore and steel solutions, mainly throughout North America.

The transaction would also enable Cleveland-Cliffs to become a vertically integrated steelmaker, expected to improve productivity. The merged group would be well-positioned to account for the components of the blast furnace and the electric arc furnace.

Shares in Cleveland-Cliffs have plummeted 51.7% in the last year, relative to the fall in 25.9% in the sector.

For 2020, the firm predicts average rates of iron ore, steel prices, and pellet premiums to be $90 per metric ton, $650 per short ton, and $50 per metric ton, respectively. Based on these projections, it aims to produce a standalone net profit of $300-$325 million and an adjusted $550-$575 million EBITDA by 2020.