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AK Steel Completes Acquisition of Severstal Dearborn
09/17/2014 - AK Steel has completed its acquisition of Severstal North America's integrated steelmaking assets located in Dearborn, Mich.
The transaction also included a cokemaking facility and interests in three joint ventures that process flat-rolled steel products. AK Steel said that it paid US$707 million in cash for the acquisition, which includes US$314 million for working capital. The acquisition was financed with a combination of debt and equity securities offerings. The company will refer to its Dearborn, Mich., facility as "Dearborn Works."
"At AK Steel, the future is now, and the future is bright, as our acquisition of Dearborn Works makes us a larger, stronger and more flexible company," said James L. Wainscott, chairman, president and CEO of AK Steel. "The acquisition is transformational to AK Steel, and it combines much more than the operational assets of two outstanding companies. It combines great employees who will strengthen a terrific company that is better able to compete, and to win, in the global steel marketplace."
Dearborn Works, which produces high-quality, flat-rolled steels primarily for the automotive, construction and appliance markets, completed a large-scale modernization campaign in 2011. During the campaign, more than US$1.2 billion was invested in new state-of-the-art equipment and various operational improvements. The Dearborn facility is strategically located in close proximity to many of AK Steel's customers, and the assets at the steel plant and the other acquired facilities complement AK Steel's existing carbon steel operations.
The acquisition also increases AK Steel's operational and maintenance flexibility and provides the platform for significant cost-based synergies. In addition to operational and productivity enhancements, the acquisition will create purchasing, transportation and overhead cost savings. AK Steel expects the transaction to be credit-enhancing and accretive to its earnings, which will help create significant long-term value for the company, its employees, customers and shareholders. AK Steel anticipates annual cost-based synergies of approximately US$50 million, with approximately US$25 million realized in 2015.
The Dearborn Works blast furnace, which was rebuilt in 2007, is among the most efficient and productive blast furnaces in the world for its size. The plant also began operating a new pickle line tandem cold mill and a new hot dip galvanizing line in 2011. Similar to AK Steel's other carbon steel operations, Dearborn Works produces hot and cold rolled sheet and hot dip galvanized products, as well as other flat-rolled steel products. The plant employs approximately 1,400 people and is capable of producing approximately 2.5 million tons of finished steel per year. With the acquisition now completed, AK Steel's annual shipments are expected to exceed 7.5 million tons. AK Steel said that it intends to utilize all of the production units at Dearborn Works, and the company has no plans to cease operations at any of its current steelmaking or steel finishing facilities.
"At AK Steel, the future is now, and the future is bright, as our acquisition of Dearborn Works makes us a larger, stronger and more flexible company," said James L. Wainscott, chairman, president and CEO of AK Steel. "The acquisition is transformational to AK Steel, and it combines much more than the operational assets of two outstanding companies. It combines great employees who will strengthen a terrific company that is better able to compete, and to win, in the global steel marketplace."
Dearborn Works, which produces high-quality, flat-rolled steels primarily for the automotive, construction and appliance markets, completed a large-scale modernization campaign in 2011. During the campaign, more than US$1.2 billion was invested in new state-of-the-art equipment and various operational improvements. The Dearborn facility is strategically located in close proximity to many of AK Steel's customers, and the assets at the steel plant and the other acquired facilities complement AK Steel's existing carbon steel operations.
The acquisition also increases AK Steel's operational and maintenance flexibility and provides the platform for significant cost-based synergies. In addition to operational and productivity enhancements, the acquisition will create purchasing, transportation and overhead cost savings. AK Steel expects the transaction to be credit-enhancing and accretive to its earnings, which will help create significant long-term value for the company, its employees, customers and shareholders. AK Steel anticipates annual cost-based synergies of approximately US$50 million, with approximately US$25 million realized in 2015.
The Dearborn Works blast furnace, which was rebuilt in 2007, is among the most efficient and productive blast furnaces in the world for its size. The plant also began operating a new pickle line tandem cold mill and a new hot dip galvanizing line in 2011. Similar to AK Steel's other carbon steel operations, Dearborn Works produces hot and cold rolled sheet and hot dip galvanized products, as well as other flat-rolled steel products. The plant employs approximately 1,400 people and is capable of producing approximately 2.5 million tons of finished steel per year. With the acquisition now completed, AK Steel's annual shipments are expected to exceed 7.5 million tons. AK Steel said that it intends to utilize all of the production units at Dearborn Works, and the company has no plans to cease operations at any of its current steelmaking or steel finishing facilities.
