July 23, 2014
AK Steel to Buy Severstal Dearborn
AK Steel, West Chester, Pa., has agreed to acquire Severstal North America's integrated steel mill in Dearborn, Mich., for $700 million. The acquisition also includes a cokemaking facility and interests in three joint ventures that process flat-rolled steel products. Russian parent OAO Severstal exits the U.S. market with its concurrent sales of the Dearborn mill to AK and its Columbus, Miss., mill to Steel Dynamics Inc. (see related story).
The Dearborn plant, which produces high-quality flat-rolled steels primarily for the automotive, construction and appliance markets, completed a large-scale modernization campaign in 2011. The Dearborn facility is strategically located near many of AK Steel's customers, and the assets at the steel plant and the other acquired facilities complement AK Steel's existing carbon steel operations, says James L. Wainscott, chairman, president and CEO of AK Steel.
"The acquisition of Severstal Dearborn allows us to grow our business profitability and better serve our customers," he says. "It furthers our automotive strategy and strengthens our carbon steelmaking footprint." It also increases AK Steel's operational flexibility and enables significant cost savings. The company anticipates annual synergies of approximately $50 million.
Dearborn's blast furnace, which was rebuilt in 2007, is among the most efficient and productive blast furnaces in the world for its size. The plant also began operating a new pickle line tandem cold mill and a new hot-dip galvanizing line in 2011.
Similar to AK Steel's existing carbon steel operations, the Dearborn plant produces hot- and cold-rolled sheet and hot-dip galvanized products, as well as other flat-rolled steel products. The plant employs 1,400 and is capable of producing about 2.5 million tons of finished steel per year.
Upon completion of the acquisition, AK Steel's annual shipments will exceed 7.5 million tons. The company intends to utilize all of Dearborn's production units and has no plans to cease operations at any of its current steelmaking or steel finishing facilities.