Lourenco Goncalves, president, CEO, Cleveland-Cliffs Inc.

MARQUETTE — Cleveland Ciiffs Inc. will expand its organization to include steelmaking by the end of 2020.

The company announced today an all stock deal, reportedly valued at $1.1 billion, as a “definitive merger agreement” with AK Steel Holding Corp.

Cliffs obtained roughly $2 billion in financing in connection with the merger, a Cliffs press release states.

AK Steel, headquartered in West Chester, Ohio, produces steel for the automotive, infrastructure and manufacturing markets, including electrical power.

The company has about 9,500 employees at operations in the U.S., Canada and Mexico, along with facilities in Western Europe, the release states.

Cliffs CEO Lourenco Goncalves will lead the new company, which will combine “North America’s largest producer of iron ore pellets” with “a leading producer of innovative flat-rolled carbon, stainless and electrical steel products, to create a vertically integrated producer of value-added iron ore and steel products,” according to the release.

The merger solidifies the demand for Cliffs’ pellets, the release states.

The combined company is expected to “ensure pellet volume commitments to AK Steel’s blast furnaces along with Cliffs’ Toledo hot-briquetted iron facility to complement its existing long-term minimum volume pellet off-take agreements with other key integrated steel producers,” the release states.

Current AK Steel stockholders will receive .40 shares of Cliffs common stock for each outstanding share of AK Steel common stock they own, or $3.36 per share under the pact, which is subject to the approval of shareholders in both companies and regulatory approvals.

“We are excited to be able to deliver real value to the shareholders of both Cliffs and AK Steel through a value-enhancing and leverage-neutral transaction,” Goncalves said in Monday’s release. “By combining the best-in-class quality of AK Steel’s assets and its enviable product mix with Cliffs’ debt profile and proven management team, we are creating a premier North American company, self-sufficient in iron ore pellets and geared toward high value-added steel products.”

Lisa Bowers can be reached at 906-228-2500, ext. 242.