ArcelorMittal has signed a definitive agreement to sell 100 per cent stake in ArcelorMittal USA to Cleveland-Cliffs Inc for around $1.4 billion in both cash and stock.
ArcelorMittal, in a statement on Monday, said that around one third of the consideration is in upfront cash – $505 million and the remaining two-third of the consideration is in the form of equity.
Further, Cleveland-Cliffs will assume the liabilities of ArcelorMittal USA, including net liabilities of approximately $0.5 billion and pensions and other post-employment benefit liabilities which Cleveland-Cliffs values at $1.5 billion.
Cleveland-Cliffs said in a statement that it will acquire ArcelorMittal USA 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.
With the transaction, ArcelorMittal USA has achieved “favourable” valuation due to the high synergistic potential of the combined company, the ArcelorMittal statement said.
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Lakshmi Mittal, Chairman and CEO of ArcelorMittal, said: “This transaction is a unique opportunity for ArcelorMittal to unlock significant value for shareholders while retaining exposure to the North American economy through our high-quality NAFTA assets alongside a participation in what will be a stronger, better integrated, US business.”
“I would like to thank all employees of ArcelorMittal USA for their hard work in ensuring the business maintained its reputation as a trusted, quality supplier of steels for American manufacturing. I am confident you will have a bright future with Cleveland-Cliffs,” he said.
Aditya Mittal, President and CFO, ArcelorMittal, said that the transaction also completes the steel major’s $2 billion asset portfolio optimisation target and enables it to return cash to the shareholders.
Lourenco Goncalves, President and CEO of Cleveland-Cliffs, said: “Steel-making 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 organisation 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.”
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