GLOBAL steel giant ArcelorMittal has said that it would merge its US operations with producer Cleveland-Cliffs for $1.4 billion.
Following the announcement, share price of the company soared more than seven per cent on the Paris stock exchange on Monday (28).
ArcelorMittal, hit by a second-quarter slump in steel demand owing to coronavirus lockdowns, added 7.04 per cent to €11.04 in early trading although it remains down 29.4 per cent on the year as a whole.
ArcelorMittal is the world's largest steel producer, with an annual crude steel production of 92.5 million metric tonnes as of 2018. It is ranked 120th in the 2019 Fortune Global 500 ranking of the world's largest corporations.
The firm, headquartered in Luxembourg, said in a statement that Cleveland-Cliffs would acquire 100 per cent of ArcelorMittal USA for a combination of one third cash and two thirds stock.
The deal will make Cleveland-Cliffs North America's largest flat-rolled steel producer in North America, with combined shipments as at 2019 of some 17 million net tons.
The agreement also sees Cleveland-Cliffs assume ArcelorMittal USA's net liabilities of approximately $0.5 billion and pensions and other employment benefit liabilities which Cleveland-Cliffs values at $1.5 billion, the firm said in a statement.
It added the accord would bring estimated annual cost synergies of $150 million.
"This transaction is a unique opportunity for ArcelorMittal to unlock significant value for shareholders while retaining exposure to the North American economy through our high-quality NAFTA assets alongside a participation in what will be a stronger, better integrated, US business," said chairman and CEO Lakshmi Mittal.
ArcelorMittal was formed in 2006 from the takeover and merger of Arcelor by Indian-owned Mittal Steel.
Netanyahu faces backlash for calling Britain ‘Islamic Republic’