28 September 2020, 07:45 CET
ArcelorMittal (the “Company”, “Group”) announces it has entered
into a definitive agreement (the “Agreement”) with Cleveland-Cliffs
Inc. (“Cleveland-Cliffs”) pursuant to which Cleveland-Cliffs will
acquire 100% of the shares of ArcelorMittal USA (the “Transaction”)
for a combination of cash and
stock. Transaction
Highlights
Under the terms of the agreement, ArcelorMittal expects to
receive an aggregate equity value consideration of $1.4 billion
upon closing of the Transaction. Approximately one third of the
consideration is in upfront cash ($505 million). The remaining two
thirds of the consideration is in the form of
equity:
- stock component of approximately 78 million shares of
Cleveland-Cliffs common stock with value of $500 million1; and
- non-voting preferred stock redeemable for approximately 58
million shares of Cleveland-Cliffs common stock with an aggregate
value of $373 million or an equivalent amount in cash2.
In addition, Cleveland-Cliffs will assume the liabilities of
ArcelorMittal USA, including net liabilities of approximately $0.5
billion and pensions and other post-employment benefit liabilities
(“OPEB”) which Cleveland-Cliffs values at $1.5 billion3.
Benefits to ArcelorMittal from the Transaction
Transaction crystallizing compelling value to
ArcelorMittal’s shareholders
- Favourable valuation achieved for ArcelorMittal USA due to the
high synergistic potential of the combined company. The Transaction
valuation for ArcelorMittal USA equates to an enterprise value
multiple of approximately 6x through-the-cycle EBITDA4.
- ArcelorMittal will participate in the upside potential of the
larger combined company, which is more diversified,
fully-integrated and has significant synergy potential.
Significant
value creation potential from exposure to a highly synergetic
combination
- The combined company is expected to generate an estimated $150
million of annual cost synergies. ArcelorMittal will participate in
the future value creation potential through its minority
shareholding.
- Key areas of anticipated synergies include optimising the
combined footprint, raw material sourcing and supply chain
efficiencies, and integrating corporate functions.
Strategic repositioning of ArcelorMittal’s North
American platform
- This transaction repositions ArcelorMittal’s platform in North
America which will continue to service its clients through its
strategic assets in Canada, Mexico and AM/NS Calvert in the
US.
- These assets represent a strong footprint in North America with
Dofasco and ArcelorMittal Mexico amongst the lowest cost producers
in the region. AM/NS Calvert, which is already amongst the world’s
most advanced steel finishing facilities, will be augmented by the
recently announced intention to construct an EAF to optimise its
slab sourcing.
- ArcelorMittal will retain its R&D programme and innovation
centres to maintain its product and process development that
underpins its leadership
position.
Positive financial impact on ArcelorMittal
enables opportunity for cash returns to
shareholders
- The deconsolidation of the associated liabilities at
ArcelorMittal USA, comprising mostly pension and OPEB liabilities,
will improve the Group’s risk profile, reduce net debt and
strengthen its capital structure and credit metrics.
- ArcelorMittal intends to redistribute $500 million of the cash
proceeds to shareholders through a share buyback programme.
- The buyback programme will commence with effect from today and
comply with purchase price rules as per the Company’s share buyback
mandate. Share buybacks may be undertaken until the earlier of 31
March 2021 or when ArcelorMittal has fully utilised the allocated
$500 million.
Commenting, Mr. Lakshmi Mittal, Chairman and CEO,
ArcelorMittal, said:
“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. I would like to thank all employees of
ArcelorMittal USA for their hard work in ensuring the business
maintained its reputation as a trusted, quality supplier of steels
for American manufacturing. I am confident you will have a bright
future with Cleveland-Cliffs.”
Mr. Aditya Mittal, President and CFO, ArcelorMittal,
said:
“Combining these two companies, which have enjoyed a long and
strong supplier/customer relationship, is a unique opportunity to
create a competitive and resilient company with considerable
synergy potential. As a result, this transaction offers compelling
value proposition with further upside potential. The transaction
also completes our $2 billion asset portfolio optimisation target
and enables us to return cash to shareholders.”
About ArcelorMittal USA
ArcelorMittal USA is one of the largest steelmakers in the USA
and serves a broad manufacturing base as a leading supplier of
quality steel products in major North American markets including
automotive, construction, pipe and tube, appliance, container and
machinery. ArcelorMittal USA owns and operates several facilities,
including mines, integrated steelmaking facilities, mini-mills and
finishing operations. In 2019, ArcelorMittal USA had revenues of
$9.9 billion and total steel shipments of 12.5 million short
tonnes.
Additional Transaction Details
The Transaction has received the approval of both ArcelorMittal
and Cleveland-Cliffs Boards of Directors and is expected to close
within the fourth quarter of 2020, subject to receipt of regulatory
approvals and satisfaction of other customary closing
conditions.
Advisors and Counsel
BofA Securities is acting as financial advisor to ArcelorMittal
and Cleary Gottlieb Steen & Hamilton LLP is serving as legal
counsel.
Conference Call and Webcast Information
ArcelorMittal will conduct a live conference call and webcast on
September 28 at 9:30am EST; 2:30pm GMT; 3:30pm CET. The call will
be broadcast live and archived on ArcelorMittal’s website at
http://corporate.arcelormittal.com/. Presentation slides will also
be available on the webcast link on the Investor Relations section
of ArcelorMittal’s website.
Dial in numbers for the conference call are:
Location |
Toll free |
Local dial in |
Participant’s Code |
UK |
0808 2380676 |
+44 20 3057 6900 |
7995055# |
US |
+1 866 220 1433 |
+1 347 903 0960 |
7995055# |
France |
0805 101 469 |
+33 1 7070 6079 |
7995055# |
Germany |
0800 588 9185 |
+49 69 2222 2624 |
7995055# |
Spain |
900 828 532 |
+34 914 144 464 |
7995055# |
Luxembourg |
800 23 023 |
+352 2786 0311 |
7995055# |
Join the call via telephone using the participant code 7995055#
or alternatively use the live audio webcast link
https://interface.eviscomedia.com/player/1128/index.en.html
Ends
About ArcelorMittal
ArcelorMittal is the world's leading steel and
mining company, with a presence in 60 countries and primary
steelmaking facilities in 18 countries. In 2019, ArcelorMittal had
revenues of $70.6 billion and crude steel production of 89.8
million metric tonnes, while iron ore production reached 57.1
million metric tonnes.
Our goal is to help build a better world with
smarter steels. Steels made using innovative processes which use
less energy, emit significantly less carbon and reduce costs.
Steels that are cleaner, stronger and reusable. Steels for electric
vehicles and renewable energy infrastructure that will support
societies as they transform through this century.
With steel at our core, our inventive people and
an entrepreneurial culture at heart, we will support the world in
making that change. This is what we believe it takes to be the
steel company of the future.
For more information about ArcelorMittal please
visit: http://corporate.arcelormittal.com/
Contact information ArcelorMittal Investor
RelationsDaniel Fairclough: +44 20 7543 1105
Contact information ArcelorMittal Corporate
CommunicationsPaul Weigh: +44 20 3214 2419E-mail:
press@arcelormittal.com
1 Number of shares determined by agreed value of $500 million
based on volume weighted average price of Cleveland-Cliffs common
shares from August 19, 2020 to September 25, 2020 of $6.39 per
share.
2 Number of shares determined by agreed value of $373 million
based on volume weighted average price of Cleveland-Cliffs common
shares from August 19, 2020 to September 25, 2020 of $6.39 per
share
3 For the balance sheet carrying values please refer to the
financial statements included in ArcelorMittal’s 2019 annual report
on Form 20-F.
4 Based on an average annual EBITDA from 2017 to 1H 2020 under
US GAAP.
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