|Bid||2.9800 x 900|
|Ask||2.9900 x 42300|
|Day's range||2.9700 - 3.1000|
|52-week range||1.6600 - 3.5900|
|Beta (5Y monthly)||3.17|
|PE ratio (TTM)||9.63|
|Earnings date||26 Feb 2020|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||09 May 2012|
|1y target est||3.09|
Former Attorney General of Louisiana Charles C. Foti, Jr., Esq. and the law firm of Kahn Swick & Foti, LLC ("KSF") are investigating the proposed sale of AK Steel Holding Corporation (NYSE: AKS) to Cleveland-Cliffs Inc. (NYSE: CLF). Under the terms of the proposed transaction, shareholders of AK will receive only 0.40 shares of Cliffs for each share of AK that they own. KSF is seeking to determine whether this consideration and the process that led to it are adequate, or whether the consideration undervalues the Company.
(Bloomberg Opinion) -- An otherwise fairly unremarkable Tuesday morning thankfully delivered one of the more memorable answers on an M&A call. Lourenco Goncalves, CEO of Cleveland-Cliffs Inc., was asked a sensible question about the risks around transfer pricing in the just-announced acquisition of AK Steel Corp., to which he delivered this bracing dose of honesty:It’s our company after we close, so we can do whatever we want at the end of the day.Except, of course, the “our” there includes the investors who own Cliffs. Some of them didn’t really agree with the spirit of Goncalves’s take. By midmorning in New York, Cliffs shares were down more than 12%, all but wiping out the premium AK Steel’s own shareholders were being offered in the all-stock deal. Indeed, the immediate winners here aren’t the shareholders of either company, but rather AK Steel’s bondholders.That question about transfer pricing was aimed at one of the main stated rationales for the deal: namely, that combining Cliffs’ iron-ore pellets business with AK Steel’s furnaces would boost the latter’s margins per ton. But that’s the age-old fallacy of vertical integration: Favorable pricing from one part of the merged business to another may optically boost profitability for one, but that comes at the expense of the other.To be fair, Goncalves went on to say people shouldn’t expect Cliffs to cross-subsidize in that way. Unfortunately, the market’s reaction suggests investors may be focused more on the “we can do whatever we want” bit.With the long-term benefits of vertical integration questionable, this deal looks more like an alloy of defensiveness and opportunism.AK Steel is under pressure on two fronts. First, almost two-thirds of its sales are tied to the automotive industry. That is a great business for any steelmaker — except when U.S. auto sales look set to plateau or decline and major overseas markets such as China are struggling already. Steel prices have dropped sharply from the tariff-induced highs of 2018.Second, the continued shift in market share toward electric-arc furnaces using recycled steel represents a structural problem for traditional producers such as AK Steel. This is also why Cliffs is investing in facilities producing more hot-briquetted iron, which targets arc furnaces. Wen Li, an analyst at CreditSights, points out that AK Steel’s leverage — net debt of 3.7 times adjusted Ebitda at the end of September —remained elevated even when steel pricing was good, and was likely to rise as automotive contracts get reset at lower prices.In buying AK Steel, therefore, Cliffs provides support — including refinancing of near-term debt maturities — to a major customer that accounted for a quarter of its product revenue in 2018. Hence, even as Cliffs’ stock plunged and AK Steel’s battered stock ticked up a little on Tuesday morning, the target’s bondholders were high-fiving:The opportunist aspect of the deal reflects AK Steel’s pricing. Cliffs has a literal moat in the form of its positioning in the Great Lakes region, shielding it from foreign competition. However, it also limits growth prospects; consensus forecasts imply earnings per share will fall almost 30% in 2020 and by 2022 will be merely flat with 2019’s level. Even if AK Steel’s vertical integration is of dubious benefit, it offers the possibility of cutting costs to boost the bottom line. At $120 million a year, the touted savings target equates to just under 40% of AK Steel’s trailing selling, general and administrative expenses, which seems like a reasonable target. Taxed, it would also boost pro-forma net income by 16%, all else equal. With the exchange ratio having halved since the start of 2018, that may have been too tempting for Cliffs to pass up.As it stands, against the notional $800 million or so of present value associated with such potential savings, almost $300 million has been wiped off the value of Cliffs’ stock. It doesn’t help that two commodity producers announced a surprise deal just as we are undergoing yet another trade tantrum. Neither does the questionable vertical-integration story. This will ultimately all come down to how much cost can really be cut. On that front, at least, investors will hope management does whatever it takes.To contact the author of this story: Liam Denning at firstname.lastname@example.orgTo contact the editor responsible for this story: Mark Gongloff at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Despite the benefits of steel tariffs, shares of most U.S. steel companies remain subdued this year as weak demand and prices hurt their earnings.
Cleveland-Cliffs Inc. (CLF) and AK Steel Holding Corporation (AKS) are pleased to announce that they have entered into a definitive merger agreement pursuant to which Cliffs will acquire all of the issued and outstanding shares of AK Steel common stock. Lourenco Goncalves, Chairman of the Board, President and CEO of Cliffs, will lead the expanded organization. Under the terms of the merger agreement, AK Steel shareholders will receive 0.40 shares of Cliffs common stock for each outstanding share of AK Steel common stock they own.
Wall Street stepped back from last week's record highs on Monday, with weak U.S. manufacturing data and fresh trade worries keeping buyers on the sidelines. All three major U.S. stock averages began the last month of the year in the red as investors returned from the long holiday weekend. A report from the Institute for Supply Management (ISM) showed U.S. manufacturing activity contracted in November for the fourth consecutive month, stoking concerns that the longest period of economic expansion in U.S. history could be losing steam.
Wall Street retreated on Monday as disappointing U.S. economic data and fresh trade worries dampened investor risk appetite. The S&P 500 posted 16 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 62 new highs and 33 new lows.
Investing.com - Steel and mining companies were higher in midday trade on Monday after U.S. President Donald Trump said he was re-implementing steel tariffs on imports from Brazil and Argentina.
AK Steel (AKS) transfers aggregate pension obligations of $1.1 billion to highly-rated annuity providers for around 20,000 retirees since 2016.
While demand weakness is likely to continue, it remains to be seen if the recent recovery in steel prices is short-lived or more sustainable heading into 2020.
In 2016 Roger Newport was appointed CEO of AK Steel Holding Corporation (NYSE:AKS). This report will, first, examine...
CLF and U.S. Steel Corporation are looking at electric arc furnaces, whose variable cost dynamics make them suitable for the cyclical steel industry.
Citi is bearish on iron ore and steel prices, expecting bad news for Cleveland-Cliffs (CLF) and US steel companies. This year, CLF stock is trading almost flat.
U.S. Steel stock (X) is trading with sharp gains today after the company released its Q3 earnings. Here's why the market is so optimistic about X.
AK Steel (AKS) reported its third-quarter earnings on Wednesday in after-market trading. The stock fell sharply during trading on Thursday.
Reduced shipments to the distributors and converters market along with lower carbon spot market prices hurt AK Steel's (AKS) sales in third-quarter 2019.
AK Steel (AKS) stock was trading deep in the red in after-market trade on Wednesday. Based on the YTD price action, the stock is outperforming its peers.
AK Steel (AKS) delivered earnings and revenue surprises of -75.00% and -7.23%, respectively, for the quarter ended September 2019. Do the numbers hold clues to what lies ahead for the stock?
AK Steel’s Q3 earnings are expected today after the markets close. The company will hold its earnings call on Thursday. The stock might be volatile.