World News – CA – Cleveland-Cliffs to buy US ArcelorMittal assets

Cleveland-Cliffs Inc, the largest US producer of iron ore pellets, has agreed to purchase the US assets of the world’s largest steelmaker ArcelorMittal SA for approximately $ 1.4 billion in cash and actions

The deal, announced by the two companies on Monday, will make Cleveland-Cliffs the largest producer of flat-rolled steel in North America and, for ArcelorMittal, cede up to a quarter of the Cleveland-Cliffs business to it and will allow it to reward shareholders with a share buyback

Shares of ArcelorMittal rose 83% at the start of the session, although still not making up for losses last week, when markets tumbled over fears the rise in coronavirus cases would hamper economic recovery

Reuters reported on Sunday, citing sources, that ArcelorMittal was in talks to merge its US operations with Cleveland-Cliffs, which bought US steel producer AK Steel for $ 3 billion in March

ArcelorMittal will receive $ 505 million in cash advance and the remaining two-thirds in equity

The equity method will give ArcelorMittal an initial 16% stake in Cleveland-Cliffs, which could reach 255%

The deal will include $ 2 billion in liabilities, including pension liabilities, bringing the overall deal value to $ 3 billion

ArcelorMittal said it exceeded its target of offloading $ 2 billion in assets to reduce debt, which enabled it to proceed with a $ 500 million share buyback

It previously agreed to sell stakes in its shipping business and in Brazilian steelmaker Gerdau

ArcelorMittal said it will continue to serve the North American market through operations in Canada and Mexico, which together produced 9 million tonnes of steel last year, and its processing plant steel in Calvert, Ala., a joint venture with Nippon Steel

The U of ArcelorMittalS the company has more than 18,000 employees and 25 facilities including mining, steelmaking facilities and finishing operations They produced 129 million tons of steel in 2019

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