CLF - Why Shares of Cleveland-Cliffs Are Plunging Today
Shares of Cleveland-Cliffs (NYSE: CLF) fell more than 13% on Tuesday morning after the iron ore producer announced plans to acquire AK Steel (NYSE: AKS) for $1.1 billion in stock. The buyer sees opportunities to cut costs via vertical integration, but the markets on Tuesday at least were more focused on the risks.
Before markets opened on Tuesday, Cleveland-Cliffs said it has agreed to swap 0.40 shares for each share of AK Steel. Based on Monday's close, the deal values AK Steel at about $3.36 per share, a 16% premium to the target's Monday close. But much of that premium evaporated on Tuesday as Cleveland-Cliffs shares fell.
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