ASHLAND, Ky. (WKYT/WSAZ) - Cleveland-Cliffs is buying AK Steel in a stock deal valued at about $1.1 billion.
After a brief spike in steel prices, U.S. steel producers have struggled since the Trump administration put steel tariffs into place last year. Domestic demand has slumped along with the energy sector as drillers pull back on purchases of steel pipe.
The companies said Tuesday that they are creating a vertically integrated business. Cliffs, North America’s largest producer of iron ore pellets, would get access to AK Steel’s flat-rolled carbon, stainless and electrical steel products operations.
The combined company will ensure commitments to AK Steel and Cleveland-Cliffs Inc., and, according to a release obtained by WSAZ, the potential for manufacturing in Ashland "would create future opportunities."
AK Steel Holding Corp. stockholders will receive 0.40 shares of Cliffs stock for each AK Steel share they own. Cliffs shareholders will own approximately 68% of the combined company, and AK Steel shareholders will own about 32%.
The transaction is expected to close in the first half of 2020.
The Associated Press contributed to this report.