Severstal Selling U.S. Plants For $2.3B
NEW YORK (AP) -- Russian steel company Severstal is exiting the U.S. market, selling a pair of steel plants to AK Steel and Steel Dynamics for about $2.33 billion.
Word of a possible sale began to circulate earlier this year as the West threatened sanctions against Russia for its activity in the Ukraine, but Severstal has not among those companies targeted by those actions.
Steel Dynamics Inc. said Monday that it will pay about $1.63 billion for Severstal Columbus, which is located in northeast Mississippi. The acquisition will increase Steel Dynamics' annual steel shipping capacity by approximately 40 percent to 11 million tons.
Steel Dynamics, based in Ft. Wayne, Indiana, anticipates the deal will immediately add to its earnings per share.
The boards of both companies have approved the sale, which is expected to be completed before year's end.
Separately, AK Steel Holding Corp. said that it is buying Severstal's steel plant in Dearborn, Michigan for $700 million. The deal also includes a coke making plant and interests in three joint ventures that process flat-rolled steel products.
The West Chester, Ohio steelmaker said that the Dearborn plant is located close to many of its customers and that the assets it is getting in the sale complement its existing carbon steel operations. The company expects the transaction to immediately add to its earnings and generate about $50 million in annual cost savings.
AK Steel said it has no plans to stop operations at any of its current steelmaking or steeling finishing plants. It anticipates the deal closing in the fourth quarter.