In an expansion deal that will mean a more direct market for a key Iron Range taconite producer, Cleveland-Cliffs has agreed to buy another Ohio company, AK Steel Holding, in a $1.1 billion stock deal.
With the purchase, Cliffs — which owns United Taconite, Northshore Mining and part of Hibbing Taconite in Minnesota and iron operations in Michigan — will create a fully integrated iron and steelmaking enterprise, company officials said on Tuesday.
AK Steel, based near Cincinnati, makes carbon and stainless steel tubing products, hot- and cold-stamped components and die design and tooling products.
"Together, Cliffs and AK Steel will have a presence across the entire manufacturing process, from [iron ore] mining to pelletizing to the development and production of finished, high-value steel products, including 'next generation' advanced high strength steels for automotive and other markets," Cliffs officials said in a statement.
AK Steel has 9,500 employees and serves markets ranging from automotive makers to electrical power firms.
It has plants in the U.S., Canada and Mexico and has a presence in Western Europe.
"For Cliffs, we expect to realize immediate growth and a long-desired objective of a more diverse customer base, as well as more predictable cash flow generation due to the contracted nature of AK Steel's sales of high-end automotive steel," said Cleveland-Cliffs CEO Lourenco Goncalves.
He said the businesses were complementary and create a "compelling business model."
