AKS - AK Steel's Rescue Offer Might Not Be Great for Investors
Cleveland-Cliffs (NYSE: CLF) is one of North America's largest iron ore producers. AK Steel (NYSE: AKS) is one of North America's largest primary steel producers. Put them together and you get an integrated steel company -- but it remains to be seen if you actually get a better company. Here's why investors should think twice before getting excited about Cleveland-Cliffs' offer to buy AK Steel.
For more than 100 years, Cleveland-Cliffs has been producing iron ore in North America. Its primary customers are steel companies like AK Steel. Iron ore, however, is a commodity subject to price swings based on supply and demand. So its business tends to be cyclical.
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