Cleveland-Cliffs’s Merger With AK Steel Holding Corporation

Jones Day is advising Cleveland-Cliffs Inc. (NYSE: CLF) in its merger with AK Steel Holding Corporation (NYSE: AKS) pursuant to which Cliffs will acquire all of the issued and outstanding shares of AK Steel common stock. Fried Frank acted as counsel to Goldman Sachs as financial advisor to AK Steel Holding Corporation.

Under the terms of the merger agreement, AK Steel shareholders will receive 0.40 shares of Cliffs common stock for each outstanding share of AK Steel common stock they own. Upon completion of the transaction, Cliffs shareholders will own approximately 68% and AK Steel shareholders will own approximately 32% of the combined company, respectively, on a fully diluted basis.

The fixed exchange ratio implies a consideration of $3.36 per share of AK Steel common stock and represents a premium of 16% based on the closing share prices of Cliffs and AK Steel common shares, respectively, as of December 2, 2019, and a premium of 27% based on the 30-day volume weighted average price of AK Steel common shares. The transaction implies an aggregate consideration to AK Steel shareholders of approximately $1.1 billion on a fully diluted basis, a total enterprise value of approximately $3.0 billion for AK Steel and an acquisition multiple of 5.6x LTM Adjusted EBITDA.

Cleveland-Cliffs is a major supplier of iron ore pellets to the North American steel industry from its mines and pellet plants located in Michigan and Minnesota. AK Steel is a leading producer of flat-rolled carbon, stainless and electrical steel products, primarily for the automotive, infrastructure and manufacturing, including electrical power, and distributors and converters markets.

Moelis & Company LLC and Credit Suisse are acting as financial advisors to Cliffs. Goldman Sachs & Co. LLC is acting as financial advisor to AK Steel and Weil, Gotshal & Manges LLP is serving as legal counsel.

The Jones Day team advising Cliffs is led by James Dougherty (Picture, New York), Ben Stulberg (Cleveland), and Dotun Obadina (Minneapolis).

The Fried Frank team advising Goldman Sachs was led by corporate partner Philip Richter and included corporate associates Ryan P. Fitzpatrick and Roy Tannenbaum.

Involved fees earner: Ryan Fitzpatrick – Fried Frank Harris Shriver & Jacobson; Philip Richter – Fried Frank Harris Shriver & Jacobson; Roy Tannenbaum – Fried Frank Harris Shriver & Jacobson; James Dougherty – Jones Day; Dotun Obadina – Jones Day; Ben Stulberg – Jones Day;

Law Firms: Fried Frank Harris Shriver & Jacobson; Jones Day;

Clients: Cleveland-Cliffs Inc; Goldman Sachs;