AK Steel Closes Acquisition Of Severstal Dearborn

(RTTNews) - AK Steel (AKS) said Tuesday it has completed its acquisition of Severstal North America's integrated steelmaking assets located in Dearborn, Michigan. The transaction also included a cokemaking facility and interests in three joint ventures that process flat-rolled steel products.

AK Steel paid $707 million in cash for the acquisition, which includes $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, Michigan facility as "Dearborn Works."

Dearborn Works, which produces flat-rolled steels primarily for the automotive, construction and appliance markets, completed a large-scale modernization campaign in 2011. During the campaign, more than $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.

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 about $50 million, with about $25 million realized in 2015.

With the acquisition now completed, AK Steel's annual shipments are expected to exceed 7.5 million tons.