Cleveland Cliffs (NYSE:CLF) acquiring ArcelorMittal (NYSE:MT) for $1.4B

In the next chapter of the Iron Ore and Steel saga, we see the largest US Iron Ore pellet producer acquiring the world’s largest steelmaker. In a deal that’s worth a whopping $1.4B, the result of Cleveland Cliffs’ (CLF) acquisition ArcelorMittal (MT) is that it will be the largest flat-rolled steel producer and largest Iron Ore pellet producer in North America. That is one hell of a title to hold.

This is a vertically integrated acquisition that will surely impact the upstream Iron Ore markets. According to CNBC:

Cleveland-Cliffs Inc, the largest U.S. producer of iron ore pellets, said on Monday it had agreed to buy the U.S. assets of world’s largest steelmaker ArcelorMittal SA for about $1.4 billion.

The deal follows a push among steelmakers to consolidate and diversify their business, making it less vulnerable to swings in demand.

Reuters reported on Sunday, citing sources, that ArcelorMittal was in talks to merge its U.S. operations with Cleveland-Cliffs.

ArcelorMittal said last year it was aiming to offload $2 billion of assets by the middle of 2021 to reduce its debt. In December, it agreed to sell a 50% stake in its shipping business, and has also sold its stake in Brazilian steelmaker Gerdau.

ArcelorMittal’s U.S. business has more than 18,000 employees and 25 facilities, including mines, steelmaking facilities and finishing operations, according to the company’s website.

This is important because one of the stocks we recommended has an asset sharing a border with one of MT’s Iron Ore mines. None other than the Kryvyi Rih mine (purple) is a producing asset owned by the currently named Arcelor Mittal (MT), which is right next to Shymanivske (yellow and red), as seen below:

Shymanivske adjacent to Yugok mine and Arcelor’s mine – NI 43-101 March 2, 2020

With consolidation in the market, is it possible that BKI will be an acquisition target in the future? The value of their assets would surely lead one to believe it is plausible.

Let’s see how this plays out.