Cleveland-Cliffs Inc. and AK Steel Holding Corporation have announced 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, according to a Tuesday morning press release.
The Ashland Works idled blast furnace may start back up, as indicated by Cliffs' key strategic and financial benefits. The move would eliminate $60 million of closure-related costs, according to Cleveland-Cliffs.
Cliffs President and CEO Lourenco Goncalves will lead the expanded organization.
Cliffs is North America's largest producer of iron ore pellets. AK Steel is a top producer of innovative flat-rolled carbon, stainless and electrical steel products.
Said Goncalves: "... 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."
Roger Newport, CEO of AK Steel, said, "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."
Listed among the merger's strategies and benefits, according to businesswire.com, is the potential start-up of pig iron manufacturing in Ashland, which would create more opportunities for pellet demand and more metallics products without significant additional capital expenditures.
The start-up would occur within the existing footprint.
The blast furnace and surrounding areas of the plant that are required to operate the furnace will be utilized if the restart happens. A timetable on the potential start-up is currently unknown. It's also not known if it will be labeled as an AK Steel or Cleveland-Cliffs operation, by name.
The transaction will close by roughly mid-2020, according to Cleveland-Cliffs.
Newport will retire upon the closing of the transaction.
The Cleveland-Cliffs headquarters will remain in Cleveland, Ohio. AK Steel will maintain its presence at its current headquarters in West Chester, Ohio.
The Daily Independent will continue to provide updates.