ArcelorMittal shares soar on US deal

Shares in steel giant ArcelorMittal soared more than 7% on the Paris stock exchange on Monday, September 28, after the firm said it would merge its United States operations with producer Cleveland-Cliffs for $1.4 billion.

ArcelorMittal, hit by a 2nd quarter slump in steel demand owing to coronavirus lockdowns, added 7.04% to 11.04 euros in early trading although it remains down 29.4% on the year as a whole.

The firm, headquartered in Luxembourg, said in a statement that Cleveland-Cliffs would acquire 100% of ArcelorMittal USA for a combination of one-third cash and two-thirds stock.

The deal will make Cleveland-Cliffs North America’s largest flat-rolled steel producer in North America, with combined shipments as of 2019 of some 17 million net tons.

The agreement also sees Cleveland-Cliffs assume ArcelorMittal USA’s net liabilities of approximately $0.5 billion and pensions and other employment benefit liabilities which Cleveland-Cliffs values at $1.5 billion, the firm said in a statement.

It added the accord would bring estimated annual cost synergies of $150 million.

“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,” said chairman and chief executive officer Lakshmi Mittal. – Rappler.com