Reuters reported on Sunday, citing sources, that ArcelorMittal was in talks to merge its U.S. operations with Cleveland-Cliffs, which bought U.S. steel producer AK Steel for $3 billion in March.
ArcelorMittal will receive $505 million upfront in cash and the remaining roughly two-thirds in the form of equity.
The equity arrangement will give ArcelorMittal an initial stake of 16% in Cleveland-Cliffs, which could rise to 25.5%.
The deal will include $2 billion of liabilities, including linked to pensions, putting the overall deal value at $3.4 billion.
ArcelorMittal said it had now passed its target of offloading $2 billion of assets to reduce its debt, allowing it to carry out a $500 million share buy-back.
It has previously agreed to sell stakes in its shipping business and in Brazilian steelmaker Gerdau.
ArcelorMittal said it would continue to serve the North American market through operations in Canada and Mexico, which together made 9 million tonnes of steel last year, and its steel processing facility in Calvert, Alabama, a joint venture with Nippon Steel.
ArcelorMittal's U.S. business has more than 18,000 employees and 25 facilities, including mines, steel-making facilities and finishing operations. They produced 12.9 million tonnes of steel in 2019.
(Reporting by Rama Venkat in Bengaluru and Philip Blenkinsop in Brussels; Editing by Shounak Dasgupta and Ed Osmond)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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