Cases & Deals

Cleveland-Cliffs to acquire AK Steel in $1.1 billion stock swap

Clients Cleveland-Cliffs Inc.

Jones Day is advising Cleveland-Cliffs Inc. (NYSE: CLF) in its merger with AK Steel Holding Corporation (NYSE: AKS) pursuant to which Cliffs will acquire all of the issued and outstanding shares of AK Steel common stock. Under the terms of the merger agreement, AK Steel shareholders will receive 0.40 shares of Cliffs common stock for each outstanding share of AK Steel common stock they own. Upon completion of the transaction, Cliffs shareholders will own approximately 68 percent and AK Steel shareholders will own approximately 32 percent of the combined company, respectively, on a fully diluted basis.

The fixed exchange ratio implies a consideration of $3.36 per share of AK Steel common stock and represents a premium of 16 percent based on the closing share prices of Cliffs and AK Steel common shares, respectively, as of December 2, 2019, and a premium of 27 percent based on the 30-day volume weighted average price of AK Steel common shares. The transaction implies an aggregate consideration to AK Steel shareholders of approximately $1.1 billion on a fully diluted basis, a total enterprise value of approximately $3.0 billion for AK Steel and an acquisition multiple of 5.6x LTM Adjusted EBITDA.

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