AK Steel to buy Severstal's Dearborn steel plant for $ 700 million

AK Steel Corporation has signed a contract to acquire Severstal North America's integrated metallurgical production assets in Dearborn for approximately $ 700 million. The deal also includes a coke production unit and three joint ventures that specialize in the production of flat-rolled steel.

The Dearborn steel block, like AK Steel, also produces hot and cold rolled sheets. In addition, Dearborn manufactures hot-dip galvanized and flat-rolled steel products. AK Steel plans to use all of Dearborn's production units, which have a production capacity of around 2.5 million tonnes of finished steel per year. Following the completion of the acquisition, AK Steel expects shipments to exceed 7.5 million tonnes per year.

The company will complete the acquisition in the fourth quarter of 2014 after receiving regulatory approval. The deal is fully backed by funding from Credit Suisse. The company will finance the acquisition through debt and equity securities.

This acquisition will benefit AK Steel in many ways. The Dearborn Integrated Steel Plant is located close to many of the company's customers. The assets and facilities of the Dearborn Block provide an opportunity to develop existing carbon steel manufacturing operations.

With this acquisition, AK Steel will be able to obtain a highly modernized steel production infrastructure and first-class equipment. This will increase the company's operational efficiency and profit. In addition, it is possible to save purchasing costs, transportation and overhead costs. The company has already calculated the synergy costs for the full year following the acquisition.