United States Steel Corp. is on the verge of becoming the sole owner of Big River Steel, the first “superproject” in the history of the Natural State.
U.S. Steel has exercised its call option to acquire the remaining equity of BRS for approximately $774 million from cash on hand. The company ended November with approximately $2.9 billion of liquidity, including about $1.7 billion in cash. The deal is expected to be completed in the first quarter of 2021, subject to satisfaction of customary closing conditions, including antitrust approval.
U.S. Steel bought a 49.9% ownership interest in BRS in November 2019 for a reported $700 million in cash.
“For months, I’ve said that we can’t get to the future fast enough. Today, I can say the future is now. We are acquiring Big River Steel, the cornerstone of our ‘Best of Both’ strategy,” said David B. Burritt, President and Chief Executive Officer of U. S. Steel. “With Big River Steel, we can offer customers the high performance, innovative steel products they expect from U. S. Steel’s scientists and application engineers made through a state-of-the-art, environmentally sustainable and efficient mini mill process.”
BRS officials expected the buyout at some point.
“I’m extremely proud of what our Big River Steel team has achieved in building the most technologically advanced and only LEED certified steel mill, and I’m equally proud that we are joining a company that not only values our many accomplishments, but shares our vision as well,” said Big River Steel CEO David Stickler. “Being an entrepreneurial disrupter is in our DNA and I’m excited about the possibilities we have already demonstrated by leveraging U. S. Steel’s industry-leading research and development capabilities. I can’t wait to show the world what the ‘Best of Both’ truly means.”
BRS operates the LEED-certified flex mill in Northeast Arkansas on the edge of the Mississippi River in Osceola that is touted as the most advanced flat-rolled steel mill in North America. It produces 3.3 million tons annually, marking it as one of the largest electric arc furnace-oriented flat-rolled mills on the continent.
Burritt continued, “We are acquiring now to expand the benefits of this powerful partnership. This is aligned with the strong strategic execution and meaningful progress we’ve demonstrated in 2020 toward our goal of $1 billion in capital and operational cash improvements. By completing our top strategic priority, Big River Steel, we expect to strengthen our order book, increase our competitiveness and accelerate further product innovation for our customers. Longer term, the lower, variable cost structure will increase our efficiency, profitability and cash flow across the business cycle.”
This complete acquisition will increase U. S. Steel’s ability to supply automotive manufacturers with the materials they need to not only meet automobile passenger safety requirements but also significantly reduce weight and emissions to meet future vehicle fuel efficiency (CAFE) standards, all made through an ultra-low-carbon emission production process, according to the company.
The acquisition is expected to allow U. S. Steel to develop a wider range of steel grades, including grades predominately made by integrated producers.
Under the terms of the 2019 agreement between Big River Steel, U. S. Steel and the other Big River Steel equity holders, U. S. Steel and the relevant parties will enter into a purchase agreement providing for the purchase of outstanding equity interests not already owned by U. S. Steel for an aggregate price of $774 million, which will contain customary terms and conditions. In order to preserve certain tax benefits related to Big River Steel’s Phase II-A expansion, U. S. Steel will defer the closing of the purchase of a de minimis percentage of the equity in Big River Steel for a limited period.