United States Steel Corp. (U.S. Steel) will be acquiring the remainder of Big River Steel’s equity in a $774 million transaction.
The purchase comes roughly a year after U.S. Steel bought a 49.9 percent stake in the Osceola-based steel mill. U.S. Steel paid $700 million for the stake on Oct. 31, 2019.
Pittsburgh-based U.S. Steel is exercising a call option to acquire the remainder equity and is expected to use cash on hand for the transaction. According to the company, it ended November with $2.9 billion in liquidity, including $1.7 billion in cash. The transaction is expected to close in the first quarter of 2021 pending regulatory approvals.
U.S. Steel president and CEO David B. Burritt called Big River Steel “the most technologically and only LEED certified steel mill,” and he said that the combination of Big River’s technology and U.S. Steel’s research and development capabilities would energize the company’s “Best of Both” strategy.
“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,” Burritt said in a statement. “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.”
Big River Steel will add approximately 3.3 million tons of hot-rolled steel production capacity to U.S. Steel’s portfolio. In November, Big River Steel announced that it had launched a $716 million expansion of its scrap metal recycling and flat-rolled steel production facility, which would double its annual capacity from 1.65 million to 3.3 million tons.
As part of this expansion, Big River Steel brought a second electric arc furnace, ladle metallurgical station, thin-slab continuous caster, tunnel furnace and hot mill downcoiler online more than two months ahead of schedule.
Since the October 2019 acquisition, Big River Steel has produced substrates for U.S. Steel’s WG3 high-strength steel and other automotive grade steels, and the new transaction will capitalize on this to increase U.S. Steel’s ability to supply manufacturers with materials to meet increased safety and sustainability standards.
According to a U.S. Steel news release, Big River Steel will also play a role in the company’s plays to reduce its greenhouse gas emissions intensity by 20 percent by 2030.
During the transaction, Barclays served as a mergers and acquisitions financial advisor, with PJT Advisors and Rothschild & Co. serving as U.S.’s steel financing advisors and Milbank LLP serving as legal counsel.
In the wake the acquisition’s announcement, shares of U.S. Steel shot up in price by more than 10 percent. As of 10:35 a.m. on Tuesday, shares were trading at $19.05, an increase of $1.85 or an increase of 10.76 percent.
U.S. Steel had closed at $17.19 per share on Monday, Dec. 7.