- Completes strategic investment in North America’s most
advanced flat-rolled mini mill
- Creates North America’s only customer-centric “Best of Both”
steelmaker to combine world-competitive integrated and mini mill
technologies
- Combines industry-leading Generation 3 advanced
high-strength steel product know-how with efficient, low-cost mini
mill production process
- Provides unique customer value proposition of
differentiated, high-performance, environmentally sustainable steel
solutions
- Creates a more competitive, agile and customer-centric
organization with an expanded footprint to serve the growing
southern U.S. and Mexico automotive end-markets
- Expands talent pool by adding Big River Steel’s skilled,
entrepreneurial mini mill operators to U. S. Steel’s
integrated steelmaking and finishing experts
- Supports the continued achievement of as much as $1 billion
in capital and operational cash improvements by 2022
United States Steel Corporation (NYSE: X) (“U. S. Steel”)
announced today it has exercised its call option to acquire the
remaining equity of Big River Steel (“Big River Steel”) for
approximately $774 million from cash on hand. The company ended
November with approximately $2.9 billion of liquidity, including
over $1.7 billion of cash. The transaction is expected to be
immediately accretive to earnings with the potential for
significant synergies to further support long-term value creation.
The transaction is subject to satisfaction of customary closing
conditions, including antitrust approval, and is expected to close
in the first quarter of 2021.
“For months, I’ve said that we can’t get to the future fast
enough. Today, I can say the future is now. We are acquiring Big
River Steel, the cornerstone of our ‘Best of Both’ strategy,” said
David B. Burritt, President and Chief Executive Officer of U. S.
Steel. “With Big River Steel, we can offer customers the high
performance, innovative steel products they expect from U. S.
Steel’s scientists and application engineers made through a
state-of-the-art, environmentally sustainable and efficient mini
mill process.”
“I’m extremely proud of what our Big River Steel team has
achieved in building the most technologically advanced and only
LEED certified steel mill, and I’m equally proud that we are
joining a company that not only values our many accomplishments,
but shares our vision as well,” said Big River Steel CEO David
Stickler. “Being an entrepreneurial disrupter is in our DNA and I’m
excited about the possibilities we have already demonstrated by
leveraging U. S. Steel’s industry-leading research and development
capabilities. I can’t wait to show the world what the ‘Best of
Both’ truly means.”
Big River Steel operates a LEED-certified Flex Mill™ in
northeast Arkansas that is believed to be the newest and most
advanced flat-rolled mill in North America. Big River Steel’s
advanced manufacturing technology and skilled operators combined
with U. S. Steel’s product development capabilities and
intellectual property have allowed Big River Steel to produce
eleven advanced U. S. Steel grades, including substrate for its
XG3™ grade of Generation 3 advanced high-strength steels (AHSS).
Big River Steel offers high-quality products and services to
discerning customers in the automotive, energy, construction, and
agricultural industries. Big River Steel’s Phase II-A expansion
doubled the mill’s hot-rolled steel production capacity to 3.3
million tons annually, establishing it as one of the largest
electric arc furnace-oriented flat-rolled mills in North America.
The Phase II-A expansion was completed in November of this year,
ahead of schedule and below Big River Steel’s previously disclosed
budget.
Burritt continued, “We are acquiring now to expand the benefits
of this powerful partnership. This is aligned with the strong
strategic execution and meaningful progress we’ve demonstrated in
2020 toward our goal of $1 billion in capital and operational cash
improvements. By completing our top strategic priority, Big River
Steel, we expect to strengthen our order book, increase our
competitiveness and accelerate further product innovation for our
customers. Longer term, the lower, variable cost structure will
increase our efficiency, profitability and cash flow across the
business cycle.”
“We look forward to welcoming the Big River Steel team to the U.
S. Steel family. We have already successfully produced eleven of U.
S. Steel’s proprietary grades at Big River, including our most
innovative Generation 3 grades of advanced high-strength steel.
With Big River Steel, we expect to more nimbly respond to improving
market conditions in the near-term and disrupt the steel industry
to the long-term benefit of our customers.”
Since its October 31, 2019, acquisition of a 49.9% ownership
interest in Big River Steel, U. S. Steel has created strategic
benefits, validating the strong strategic rationale expected to be
realized upon full ownership of Big River Steel. Key
accomplishments to date include:
- Big River Steel’s production of substrate for U. S. Steel’s
industry-leading XG3™ advanced high-strength steel and other
automotive grades that will ultimately increase U. S. Steel’s
competitiveness in a broader range of automotive applications to
better serve strategic customers. This will increase U. S. Steel’s
ability to supply automotive manufacturers with the materials they
need to not only meet automobile passenger safety requirements but
also significantly reduce weight and emissions to meet future
vehicle fuel efficiency (CAFE) standards, all made through an
ultra-low-carbon emission production process. These same products
are also a “greener” solution for customers who are increasingly
focused on sustainability within their supply chains.
- U. S. Steel’s assistance to Big River Steel in developing a
wider range of steel grades, including grades predominately made by
integrated producers, demonstrating the power of the world
competitive “Best of Both” integrated and mini mill steelmaking
technology strategy.
- Validating the future role of Big River Steel’s proven
sustainable steelmaking technology will play in meeting U. S.
Steel’s commitment to reduce greenhouse gas emissions intensity
across its global footprint by 20%, as measured by the rate of
carbon dioxide equivalents emitted per ton of raw steel produced,
by 2030 based on 2018 baseline levels. Big River Steel will also
increase the steel recycling intensity within U. S. Steel’s
footprint.
- Sharing best practices during completion of U. S. Steel’s
previously announced strategic investment in electric arc furnace
steel production to accelerate operational readiness in
Alabama.
- Meaningful progress on the target of achieving as much as $1
billion in capital and operational cash improvements by rescoping
asset revitalization investments, reducing fixed costs and
extracting incremental value from excess iron ore.
Terms of the Transaction
U. S. Steel delivered notice of the exercise of its option to
acquire the remaining equity in Big River Steel. Under the terms of
the 2019 agreement between Big River Steel, U. S. Steel and the
other Big River Steel equity holders, U. S. Steel and the relevant
parties will enter into a purchase agreement providing for the
purchase of outstanding equity interests not already owned by U. S.
Steel for an aggregate price of $774 million, which will contain
customary terms and conditions. In order to preserve certain tax
benefits related to Big River Steel’s Phase II-A expansion, U. S.
Steel will defer the closing of the purchase of a de minimis
percentage of the equity in Big River Steel for a limited
period.
Timing and Approvals
Closing of the transaction is anticipated in the first quarter
of 2021, subject to satisfaction of customary closing conditions,
including antitrust approval.
Advisors
Barclays is serving as exclusive M&A financial advisor,
while PJT Advisors and Rothschild & Co. are serving as
financing advisors to U. S. Steel on the acquisition, and Milbank
LLP is providing legal counsel.
Conference Call Information
U. S. Steel will conduct a conference call to discuss the
details of this transaction on December 8, 2020, at 8 a.m. EST. To
listen to the webcast of the conference call and to access the
company’s slide presentation, please visit the U. S. Steel website,
www.ussteel.com, and click on the “Investors > Events &
Presentations” section. Replays of the conference call will be
available on the website after 10:30 a.m. EST on December 8,
2020.
FORWARD-LOOKING
STATEMENTS
This release contains information that may constitute
“forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We intend the
forward-looking statements to be covered by the safe harbor
provisions for forward-looking statements in those sections.
Generally, we have identified such forward-looking statements by
using the words “believe,” “expect,” “intend,” “estimate,”
“anticipate,” “project,” “target,” “forecast,” “aim,” "should,"
“will,” "may" and similar expressions or by using future dates in
connection with any discussion of, among other things, operating
performance, trends, events or developments that we expect or
anticipate will occur in the future, the consummation of the Big
River Steel acquisition (the “Transaction”); potential capital and
operational cash improvements; the Company’s plans, objectives,
expectations and intentions; the financial condition, results of
operations and business of the combined company; the combined
company’s products and potential; the Company’s ability to obtain
financing for other strategic projects; and the anticipated timing
of closing of the Transaction; and statements expressing general
views about future results. However, the absence of these words or
similar expressions does not mean that a statement is not
forward-looking. Forward-looking statements are not historical
facts, but instead represent only the Company’s beliefs regarding
future events, many of which, by their nature, are inherently
uncertain and outside of the Company’s control. It is possible that
the Company’s actual results and financial condition may differ,
possibly materially, from the anticipated results and financial
condition indicated in these forward-looking statements. Management
believes that these forward-looking statements are reasonable as of
the time made. However, caution should be taken not to place undue
reliance on any such forward-looking statements because such
statements speak only as of the date when made. The Company
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. In addition,
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from the Company's historical experience and our present
expectations or projections. Risks and uncertainties include, among
other things, risks related to the satisfaction of the conditions
to closing the Transaction in the anticipated timeframe or at all
and the possibility that the Transaction does not close; risks
related to the ability to realize the anticipated benefits of the
Transaction, including the possibility that the expected benefits,
synergies and cost savings from the proposed Transaction or the
capital and operational cash improvements will not be realized or
will not be realized within the expected time period; risks related
to the satisfaction of the conditions to closing (including the
failure to obtain necessary regulatory approvals) and the risk that
the businesses will not be integrated successfully following
acquisition; disruption from the Transaction making it more
difficult to maintain business and operational relationships;
negative effects of the announcement or the consummation of the
proposed Transaction on the market price of the Company’s common
stock; significant transaction costs; unknown liabilities; the risk
of litigation and/or regulatory actions related to the Transaction;
other business effects, including the effects of industry, market,
economic, political or regulatory conditions; future exchange and
interest rates; changes in tax and other laws, regulations, rates
and policies; future business combinations or disposals; and
competitive developments. All forward-looking statements rely on a
number of assumptions, estimates and data concerning future results
and events and are subject to a number of uncertainties and other
factors that could cause actual results to differ materially from
those reflected in such statements. Accordingly, the Company
cautions that the forward-looking statements contained herein are
qualified by these and other important factors and uncertainties
that could cause results to differ materially from those reflected
by such statements. For more information on additional potential
risk factors, please review the Company’s Annual Report on Form10-K
for the year ended December 31, 2019, our Quarterly Reports on Form
10-Q, and those described from time to time in our future reports
filed with the Securities and Exchange Commission.
Founded in 1901, the United States Steel Corporation is a
Fortune 250 company and leading integrated steel producer. With
extensive iron ore production and an annual raw steelmaking
capability of 22 million net tons, U. S. Steel produces high
value-added steel products for the automotive, infrastructure,
appliance, container, and energy industries. The company’s
customer-centric “Best of Both” world competitive integrated and
mini mill technology strategy is advancing a more secure,
sustainable future for U. S. Steel and its stakeholders. With
renewed emphasis on innovation and customer focus, the company
produces cutting-edge products such as U. S. Steel’s proprietary
XG3™ advanced high-strength steel. U. S. Steel is headquartered in
Pittsburgh, Pennsylvania, with world-class operations across the
United States and in Central Europe. For more information, please
visit www.ussteel.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201208005606/en/
John O. Ambler Vice President Corporate Communications T – (412)
433-2407 E – joambler@uss.com Kevin
Lewis Vice President Investor Relations T – (412) 433-6935 E –
klewis@uss.com
US Steel (NYSE:X)
Historical Stock Chart
From Apr 2024 to May 2024
US Steel (NYSE:X)
Historical Stock Chart
From May 2023 to May 2024