Shares of miner and steelmaker Cleveland-Cliffs (NYSE: CLF) rose by around 10% in the first half-hour of trading on Monday. Shares of fellow steelmaker ArcelorMittal (NYSE: MT) rose nearly 10%, as well. Both had given back their early gains by 10 a.m. EDT, with each up in the 7% range, and like their stocks, their stories are joined at the hip.
Over the weekend, Cleveland-Cliffs worked out a deal to buy virtually all of ArcelorMittal's U.S. steelmaking business. At a cost of roughly $1.4 billion, it's a fairly sizable purchase for Cleveland-Cliffs, with its approximately $2.5 billion market cap. Although the acquisition won't include any debt from the U.S. operations of ArcelorMittal, Cleveland-Cliffs will assume pension and other liabilities, bringing the total value of the deal to about $3.3 billion.
Cleveland-Cliffs will pay for the transaction with a mix of cash ($505 million) and preferred stock ($373 million), with the rest in common stock. In total, Cleveland-Cliffs will acquire six steel mills, eight finishing facilities, two iron-ore mining and pelletizing operations, and three coal operations.
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Why Cleveland-Cliffs Stock Jumped 10% at the Open Today