“By combining the best-in-class quality of AK Steel’s assets and its enviable product mix with Cliffs’ debt profile and proven management team, we are creating a premier North American company, self-sufficient in iron ore pellets and geared toward high value-added steel products,” he said. “For Cliffs, we expect to realize immediate growth and a long-desired objective of a more diverse customer base, as well as more predictable cash flow generation due to the contracted nature of AK Steel’s sales of high-end automotive steel. Our track record of providing high-grade iron ore combined with AK Steel’s recognized ability to produce the highest quality steel grades, creates a highly complementary and compelling business model. We look forward to welcoming the AK Steel team into our organization and creating a unique company focused on executing value-enhancing opportunities for all of our stakeholders.”

The deal represents a 16 percent premium to yesterday's closing price of $2.89 for AKS.

CLF says the acquisition implies a total enterprise value of ~$3B. Upon completion, CLF shareholders will own 68 percent and AKS shareholders will own 32 percent of the combined company.

CLF says it expects to realize $120M in annual cost savings within the first 12 months after closing.