The AK Steel buyout will have Cleaveland-Cliffs offering shares of its own stock in exchange for AKS stock. This will have shareholders of AKS stock receiving .40 shares of CLF stock for each share that they own.
Once the AK Steel buyout is complete, AKS investors will own 32% of the new company. The remaining 68% will belong to investors in Cleaveland-Cliffs. In total, the deal has a set value of $1.10 billion.
The offer in the AK Steel buyout values shares of AKS stock at $3.36 per share. That’s a 16.67% premium over the stock’s closing price of $2.88 on Monday. It’s also a 27% premium compared to the stock’s 30-day volume-weighted average price.
The deal will have AK Steel continue to operate under its existing brand. However, Cleaveland-Cliffs Chairman, President and CEO Lourenco Goncalves will be taking over as the head of the company. Current AK CEO Roger Newport will retire at this time.
Cleaveland-Cliffs will also update its Board of Directors following the AK Steel buyout. This will have it removing two of its own directors and adding three directors currently serving on the AK Steel Board.
AK Steel and Cleveland-Cliffs need to complete customary closing conditions before the deal is done. That includes getting approval from regulators and shareholders. So long as there are no problems, the companies expect the deal to close in the first half of 2020.
AKS stock is up 2.60% and CLF stock is down 11.40% as of Monday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.