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Cleveland firm to buy ArcelorMittal U.S. operations, including Weirton tin mill

WEIRTON — Cleveland Cliffs said Monday it will buy ArcelorMittal’s U.S. plants for $1.4 billion, a deal that would make it the largest flat-rolled steel and iron ore pellet producer in North America.

Weirton’s tin making operation would be included in the transaction, though it wasn’t singled out during a morning conference call with analysts outlining the proposed acquisition.

In announcing the deal, Lourenco Goncalve, Cleveland Cliffs chairman, president and CEO, said the purchase ticks off all the important steelmaking boxes — production volume, operational diversification, dilution of fixed costs and technical expertise.

“We’re adding to an already best-in-class finishing profile with eight facilities that have fantastic capabilities,” Goncalve said, adding it’s of “utmost importance to expand our strong position in a demanding automotive market along with other desirable end markets and products, such as tin plate for cans.”

Tin plate for the food industry is Weirton’s market niche.

Monday’s announcement marked the second major aquisition of Cleveland Cliffs this year. In March, the Cleveland-based firm, which was founded in 1847, bought AK Steel Holding Corp.

While it’s too early in the process to be making bold predictions, United Steelworkers Local 2911 President Mark Glyptis said he’s feeling optimistic.

“My feeling is it could be positive for Weirton, but that’s with not knowing their strategy at this point. That will be coming out in the next few months,” he said. “There’s still a number of hurdles that they would have to resolve for it to be finalized, and we believe that will take a number of months.

“It’s so early in the process, you don’t know what the final product will look like at the end of the day, but I will say Cleveland Cliffs is a reputable, strong company that’s been around a long time.”

Glyptis pointed out there aren’t many tin mills left in the United States, “and I believe they would want to maintain it, that they’d want to be in the tin business as well as cold rolled and the other product lines ArcelorMittal makes.”

“Cleveland Cliffs is a reputable company, they’ve proven to be successful and they would like to grow,” he added. “I would imagine they would want to be in the tin business, since there are only two major players left in the U.S. Tin is a difficult product to make and Weirton and U.S. Steel are the principle suppliers.”

ArcelorMittal President and CFO Aditya Mittal called the deal a “strategic repositioning,”

“First and most importantly, it strategically refocuses our footprint in North American to focus on high-quality and high-value assets” and adds shareholder value, Mittal told analysts during is conference call. Arcelor will get about one-third of the purchase price upfront in cash, the rest will be in the form of equity — about 78 million shares of Cleveland Cliffs common stock valued at roughly $500 million, and non-voting preferred stock redeemable for about 58 million shares of Cleveland Cliffs common stock with an aggregate value of $373 million.

“In terms of antitrust, we’re highly confident there are no concerns on the regulatory front,” Mittal said. “At the end of the day, this is not the two largest companies in the U.S. coming together, this is one of the largest players in North America divesting its share (of the business) and a smaller player becoming larger.”

ArcelorMittal has more than 18,000 employees at 25 facilities in the United States.

Goncalves said the deal would make his “a U.S.-centric company with more than 40 production facilities encompassing all areas of steel suppl chain.”

“It provides us with a level operation and commercial optionality and flexibility that cannot be replicated,” he said.

“It’s the (dawn) of a great chapter in the history of Cleveland Cliffs. I believe we are now sitting on a platform that will be a benchmark in how to produce steel … in an environmentally friendly way with the most socially responsible support from the communities and employees and more than anything, the collection of stakeholders surrounding our company.

Glyptis pointed out the Weirton mill has undergone significant changes during the past four decades, going from a subsidiary of National Steel to an employee-owned company before being purchased by ISG and, eventually, ArcelorMittal

“We’ve gone through so many changes here,” he said. “There isn’t anything that surprises me when it comes to consolidations and mergers. The industry has gone through significant change, and I believe there will continue to be more change during the next five to 10 years as the world changes, as new products come online. The industry is so much more efficient today than it was years ago, I think it’s going to continue to change over the next 10 to 20 years. You try to survive, that’s the environment we find ourselves in. I think we’ll be in that type of environment for the foreseeable future.”

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