Cleveland-Cliffs Inc. CLF and AK Steel Holding Corporation AKS recently announced that the shareholders of Cleveland-Cliffs and AK Steelâs stockholders voted in favor of all the resolutions required for completing the earlier announced ⦠Douglas O. Mitterholzer Under the terms of the merger agreement, AK Steel shareholders will receive 0.40 shares of Cliffs common stock for each outstanding share of AK Steel common stock they own. Notably, while U.S. Steel (X) has its own iron ore mines, AK Steel sources steel from third parti⦠INVESTORS AND SECURITYHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT, THE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT ARE FILED OR WILL BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS. AK Steel Recognized by General Motors as a 2019 Supplier of the Year. Cleveland-Cliffs and AK Steel will conduct a live conference call and webcast on December 3, 2019 at 8:30 a.m. Eastern Time. Both stocks have been affected by volatile steel prices this year. ______________________1 Pro forma LTM numbers exclude intercompany sales, which are calculated based on 25% of revenue, per Cleveland-Cliffs and AK Steel’s 2018 10-Ks.2 Pro forma numbers include $120 million in anticipated synergies and utilizes each companies’ respective methodologies of calculating Adj. Headquartered in West Chester, Ohio (Greater Cincinnati), the company has approximately 9,500 employees at manufacturing operations in the United States, Canada and Mexico, and facilities in Western Europe. This communication contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. General Manager, Investor Relations These and other forward-looking statements reflect AKS’s and CLF’s current beliefs and judgments and are not guarantees of future results or outcomes. Basically, with some captive supply and optionality in where Cleveland-Cliffs can ship its remaining iron ore pellets, management can direct the company's 20 million-ton iron supply to wherever it can get the highest return. Director, Investor Relations Information regarding AKS’ directors and executive officers, including a description of their direct interests, by security holdings or otherwise, is set forth in AKS’ Form 10-K for the fiscal year ended December 31, 2018, filed with the SEC on February 15, 2019 (the “AKS 10-K”), and its proxy statement filed with the SEC on April 10, 2019. Most steel stocks are getting hammered Tuesday after Cleveland-Cliffs (ticker: CLF) announced it was buying AK Steel (AKS) in an all-stock deal. In connection with the proposed transaction involving AK Steel Holding Corporation (“AKS”) and Cleveland-Cliffs Inc. (“CLF”), CLF will file with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4 that will include a joint proxy statement of AKS and CLF, which also constitutes a prospectus of CLF. Combines complementary businesses across mining, pelletizing and innovative manufacturing to create vertically integrated producer of value-added iron ore and steel products, Compelling financial profile with strong balance sheet, expected earnings accretion, and strong free cash flow generation to execute on long-term growth opportunities, Combination creates significant value for shareholders through realization of $120 million in annual cost synergies. Under the terms of the merger agreement, AK Steel shareholders will receive 0.40 shares of Cliffs common stock for each outstanding share of AK Steel common stock they own. In addition, since iron ore prices have risen this year while steel prices have declined, the transaction also takes away a risk of a reversion to a lower iron ore price. After the acquisition, Cleveland-Cliffs would obtain access to AK Steelâs steelmaking operations. The transaction is expected to ⦠Driven by the core values of safety, social, environmental and capital stewardship, Cleveland-Cliffs’ employees endeavor to provide all stakeholders with operating and financial transparency. Stay in the loop every day with Yahoo Finance's free Fully Briefed newsletter. View source version on businesswire.com: https://www.businesswire.com/news/home/20191203005504/en/, Cleveland-Cliffs Free copies of these documents may be obtained from the sources indicated above. These near-term debt maturities were probably weighing on AK Steel's stock price, which had fallen some 70% over the past three years, as opposed to just a 9% decline for Cleveland-Cliffs. Investors were apparently not enthused by the announcement, however, with Cleveland-Cliffs stock down 10.7% on the day of the announcement, though AK Steel's stock rose by 4.2%. I love looking at the "story" behind investments from an interdisciplinary point of view, with an equal appetite for high-growth disruptors and beaten-down value names. With AK Steel’s 120-year heritage, which began in Ohio, and expertise in steelmaking, AK Steel and Cliffs make an excellent combination, which we expect will facilitate a smooth integration process.”, Additional Transaction Details & Governance. A merger agreement announced Tuesday would see AK Steel acquired for $1.1 billion by Cleveland-Cliffs, the largest producer of iron ore pellets in North America. Vote âOutperformâ if you believe AKS The combination of Cliffs’ iron ore pellet capabilities and our innovative, high-quality steel product development and production is strategically compelling. AK Steel will become a direct, wholly-owned subsidiary of Cliffs and will retain its branding and corporate identity. The companies have agreed to enable the merger ⦠The company, whose name was derived from the initials of Armco, its predecessor company, and Kawasaki Steel Corporation, was acquired by Cleveland-Cliffs in 2020. Moelis & Company LLC and Credit Suisse are acting as financial advisors to Cliffs and Jones Day is serving as legal counsel. MarketBeat's community ratings are surveys of what our community members think about AK Steel and other stocks. Investors and securityholders may obtain free copies of the registration statement and the joint proxy statement/prospectus (when available) and other documents filed with the SEC by AKS or CLF through the web site maintained by the SEC at www.sec.gov. The call will be broadcast live and archived on Cliffs' website at www.clevelandcliffs.com and on AK Steel’s website at www.aksteel.com. By 2020, Cleveland-Cliffs expects to be the sole producer of hot briquetted iron (HBI) in the Great Lakes region with the development of its first production plant in Toledo, Ohio. This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. Free sign-up: Get the news straight to your inbox every day. Though Cleveland-Cliffs is a producer of iron ore, its contracts have a component tied to the price of steel, which has offset the better iron ore prices that have surged this year following the collapse of the Brumadinho dam in Brazil this past January. Â. The combined company could also save a bundle on interest costs, as Cleveland-Cliffs will now refinance AK Steel's debt, which carried a very high 7.2% average cost versus Cleveland-Cliffs' 5.1% average. That works out to about $2.95 per AK ⦠The definitive joint proxy statement/prospectus will be sent to the shareholders of AKS and the shareholders of CLF. Under the pending transaction, Cliffs would acquire AK Steel pursuant to the Agreement and Plan of Merger (the "Merger Agreement") entered into by Cliffs and AK Steel providing for the merger of a wholly-owned subsidiary of Documents filed with the SEC by AKS will also be available free of charge on the AKS website at www.aksteel.com or by contacting AKS’s investor relations department. Corporate Manager, Communications and Public Relations Through its subsidiaries, the company also provides customer solutions with carbon and stainless steel tubing products, hot- and cold-stamped components, and die design and tooling. With 30% of sales taken care of, another 40% to 50% of pellet sales contracted with ArcelorMittal (NYSE:MT) through 2026, and another 15% set to be used by Cleveland-Cliffs' new HBI plant coming in 2020, much of Cleveland-Cliffs' supply is now derisked for the next six years. The transaction has been unanimously approved by both companies’ Boards, and both Boards recommend that their respective shareholders vote in favor of the transaction. These risks, as well as other risks associated with the proposed transaction, will be more fully discussed in the joint proxy statement/prospectus that will be included in the registration statement on Form S-4 that will be filed with the SEC in connection with the proposed transaction. On Dec. 3, U.S. iron ore pellet-producer Cleveland-Cliffs (NYSE:CLF) agreed to purchase U.S. steelmaker AK Steel (NYSE:AKS) in an all-stock deal. AK Steel has outsize exposure to the automotive sector, which is currently under pressure. The companies have agreed to enable the merger of a fully-owned Cleveland-Cliffs subsidiary with and into AK Steel. In December 2019, Cleveland-Cliffs announced that it has entered into a definitive merger agreement to acquire all of the issued and outstanding shares of AK Steel common stock. Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer. The merger announcement comes a day after President Donald Trump gave a boost to shares of steel producers, by saying he was bringing back tariffs on ⦠Patricia Persico Following completion of the transaction, with Mr. Goncalves leading the expanded organization, Mr. Newport will retire as CEO and a Director of AK Steel. (216) 650-0168, AK Steel In addition, Cliffs’ existing strong balance sheet and self-sufficiency in pellets for the combined company provide flexibility to pursue additional growth opportunities, including the potential future utilization of the blast furnace in Ashland to produce merchant pig iron, an opportunity neither company could pursue on a standalone basis.”, Mr. Goncalves concluded, “For Cliffs, we expect to realize immediate growth and a long-desired objective of a more diverse customer base, as well as more predictable cash flow generation due to the contracted nature of AK Steel’s sales of high-end automotive steel. Upon completion of the transaction, Cliffs shareholders will own approximately 68% and AK Steel shareholders will own approximately 32% of the combined company, respectively, on a fully diluted basis. CLEVELAND & WEST CHESTER, Ohio--(BUSINESS WIRE)--Cleveland-Cliffs Inc. (NYSE: CLF) (âCliffsâ) and AK Steel Holding Corporation (NYSE: AKS) (âAK Steel⦠A merger agreement announced today that would see Cleveland-Cliffs acquire AK Steel for $1.1 billion is raising questions for those just learning about the deal. Paul Finan Cleveland-Cliffs will issue 0.4 shares to shareholders of AK Steel upon closing, which is supposed to occur by the end of the first half of 2020. That could mean that even exclusive of synergies, Cleveland-Cliffs may be getting a good deal. The transaction will combine Cliffs, North Americaâs largest producer of iron ore pellets, with AK Steel, a leading producer of innovative flat-rolled carbon, stainless and electrical steel products, to create a vertically integrated producer of value-added iron ore and steel products. Weâre motley! CLEVELAND & WEST CHESTER, Ohio--(BUSINESS WIRE)--Dec. 3, 2019-- Cleveland-Cliffs Inc. (NYSE: CLF) and AK Steel Holding Corporation (NYSE: AKS) are pleased to announce that they have entered into a definitive merger agreement pursuant to which Cliffs will acquire all of the issued and outstanding shares of AK Steel common stock. âThis is a new era for Cleveland-Cliffs as a producer of differentiated, high quality iron ore, metallics and steel in North America. Cleveland-Cliffs will be refinancing AK Steel's 2021 and 2023 notes, which should have the benefit of not only pushing out those near-term maturities to later in the 2020s but also locking in a lower rate, closer to Cleveland-Cliffs' current rates.Â. This article represents the opinion of the writer, who may disagree with the âofficialâ recommendation position of a Motley Fool premium advisory service. The share exchange rate equals only roughly a 16% premium to AK Steel's stock price from the prior day, given where Cleveland-Cliffs' shares were trading. AK Steel Holding Corp. was delisted and deregistered from the New York Stock Exchange after Cleveland-Cliffs, Inc. (NYSE:CLF) finalized its $3 billion acquisition of ⦠Yesterday, CLF announced that it would acquire AKS in a stock-for-stock transaction. From a fundamental point of view, the merger with AK Steel created material uncertainty, but past performance of Cleveland-Cliffs' management ⦠Lourenco Goncalves, Chairman of the Board, President and CEO of Cliffs, will lead the expanded organization. Under the terms of the merger agreement, AK ⦠For more information, visit http://www.clevelandcliffs.com. Joint Conference Call & Webcast Information. Acquiring a large customer thus takes away the renewal risk for Cleveland-Cliffs. Here's why. AK Steel, Cliffs or their respective directors, (vi) the risk that disruptions from the proposed Merger will harm AK Steelâ s or Cliffsâ business, including current plans and operations, (vii) the ability of AK Steel or Clif fs to retain and hire key Founded in 1847, Cleveland-Cliffs is the largest and oldest independent iron ore mining company in the United States. However, AK Steel also makes the advanced high-strength steels and ultra-high strength steels that should be in demand for car companies looking to meet the upcoming 2025 U.S. CAFE fuel standards. Cleveland-Cliffs Inc. (NYSE: CLF) has completed its acquisition of West Chester, Ohio-based AK Steel Holding Corp. Cliffs first announced the acquisition, valued at more than $1 billion, in December, and shareholders of both companies officially voted to approve it ⦠Cliffs CEO Lourenco Goncalves will lead the combined company, while AK Steel CEO Roger Newport will retire. AK Steel, on the other hand, is a steel producer with primarily flat rolled operations. AKS / AK Steel Holding Corp. 425 - Merger Prospectus - 425 2020-01-15 sec.gov - 425 Filed by AK Steel Holding Corporation pursuant to Rule 425 under the Securities Act of 1933, as amended, and deemed filed pursuant to Rule 14a- 12 under the Securities Exchange Act of ⦠We look forward to welcoming the AK Steel team into our organization and creating a unique company focused on executing value-enhancing opportunities for all of our stakeholders.”, Roger K. Newport, CEO of AK Steel, added, “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. (216) 694-6544, Media: For AK Steel, that means it will be somewhat shielded from future spikes in iron ore prices, as had occurred this year. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION. EBITDA.3 Defined as Adj. The transaction is expected to close in the first half of 2020, subject to approval by the shareholders of both companies, receipt of regulatory approvals and satisfaction of other customary closing conditions. The combined company will be ideally positioned to provide high-value iron ore and steel solutions to customers primarily across North America. The fixed exchange ratio implies a consideration of $3.36 per share of AK Steel common stock and represents a premium of 16% based on the closing share prices of Cliffs and AK Steel common shares, respectively, as of December 2, 2019, and a premium of 27% based on the 30-day volume weighted average price of AK Steel common shares. Together, we expect to be able to take advantage of growth opportunities faster and more fully than either company could on its own. The new company will combine Cleveland-Cliffs' iron ore pellet production capabilities, of which it had about 42% U.S. market share, with AK Steel's blast furnace steel plants and downstream businesses, which make specialized, high-grade steel parts, especially for the auto industry.
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