United States Steel Corporation Completes Strategic Investment in Big River Steel
October 31 2019 - 3:31PM
United States Steel Corporation (NYSE: X) (“U. S. Steel”)
today announced that it has completed its acquisition of a 49.9%
ownership interest in Big River Steel (“Big River”) for
approximately $700 million, which implies an enterprise value of
$2.325 billion.
“Today is a true milestone for our 118-year old
company,” said David B. Burritt, President and Chief Executive
Officer of U. S. Steel. “The closing of our investment in Big River
brings us one step closer to creating a differentiated,
world-competitive company that can offer our customers, employees
and stockholders the ‘best of both’ integrated and mini mill steel
making technology. We have done more than make an investment in the
newest and most advanced flat-rolled mill in North America … we
have invested in the future of U. S. Steel. We are gratified by the
positive response we have received from our stakeholders
recognizing the strategic rationale of this transaction since we
announced it on October 1. We now look forward to executing the
next phase of our strategy with our new partners at Big River.”
As announced on October 1, 2019, the transaction
includes a call option that gives U. S. Steel the right to acquire
the remaining 50.1% of Big River within four years at an
agreed-upon price formula. Until that time Big River will operate
independently. As previously mentioned, KM BRS, LLC (a subsidiary
of Koch Minerals, LLC) and TPG Furnace, L.P. (an affiliate of TPG
Growth) remain preferred equity holders of Big River along with the
majority common ownership position held by company management and
the Arkansas Teachers Retirement System.
U. S. Steel will account for its investment in Big
River under the equity method as control and risk of loss are
shared among the partnership members. Under the equity method of
accounting, U. S. Steel will recognize its share of Big River's
after tax net income or loss as well as the amortization of any
basis differences due to the step-up to fair value of certain
assets and liabilities attributable to Big River. The financial
impact of this acquisition will begin to be reflected in U. S.
Steel’s fourth quarter 2019 results.
For additional information about U. S. Steel’s
investment in Big River Steel, please visit
https://ussteel.com/Big-River-investment.
FORWARD LOOKING STATEMENTSThis
press release contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Words such as, but not
limited to, "believes," "expects," "anticipates," "estimates,"
"intends," "plans," "could," "may," "will," "should," and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements in this release include, among other
things, statements about the potential benefits of the investment
and transaction; anticipated cost savings; potential capital and
operational cash improvements; U. S. Steel’s plans, objectives,
expectations and intentions; the financial condition, results of
operations and business of the joint venture; the joint venture’s
products and potential; U. S. Steel’s future ability or plans to
take ownership of the joint venture as wholly owned subsidiary; U.
S. Steel’s ability to obtain financing for the transaction or other
strategic projects at anticipated interest rates or at all. Risks
and uncertainties include, among other things, risks related to the
ability to realize the anticipated benefits of the transaction,
including the possibility that the expected benefits and cost
savings from the transaction or the capital and operational cash
improvements will not be realized or will not be realized within
the expected time period; risks related to the satisfaction of the
conditions to closing a future call option transaction (including
the failure to obtain necessary regulatory approvals); and the risk
that the businesses will not be integrated successfully following
exercise of the call option; disruption from the transaction making
it more difficult to maintain business and operational
relationships; negative effects of the consummation of the
transaction on the market price of U. S. Steel’s common stock;
significant transaction costs; unknown liabilities; the risk of
litigation and/or regulatory actions related to the transaction;
other business effects, including the effects of industry, market,
economic, political or regulatory conditions; future exchange and
interest rates; changes in tax and other laws, regulations, rates
and policies; future business combinations or disposals; and
competitive developments. All forward-looking statements rely
on a number of assumptions, estimates and data concerning future
results and events and are subject to a number of uncertainties and
other factors, that could cause actual results to differ materially
from those reflected in such statements. Accordingly, U. S. Steel
cautions that the forward-looking statements contained herein are
qualified by these and other important factors and uncertainties
that could cause results to differ materially from those reflected
by such statements. For more information on additional potential
risk factors, please review U. S. Steel’s filings with the SEC,
including, but not limited to, U. S. Steel’s Annual Report on Form
10-K, Quarterly Reports on Form 10-Q and its Current Reports on
Form 8-K.About U. S. Steel
United States Steel Corporation, headquartered in
Pittsburgh, Pa., is a leading integrated steel producer and Fortune
250 company with major operations in the United States and Central
Europe. For more information about U. S. Steel, please visit
www.ussteel.com.
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CONTACTS:MediaAmanda MalkowskiAnalystCorporate CommunicationsT -
(412) 433-2512E - almalkowski@uss.com |
Investors/AnalystsKevin LewisGeneral ManagerInvestor RelationsT -
(412) 433-6935E - klewis@uss.com |
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