New York, NY, United States (4E) – Russia’s OAO Severstal announced on Monday that it will sell two of its U.S.-based steel mills to Steel Dynamics Inc. and AK Steel Corp. for cash deals totaling $2.325bn.
The West Chester, Ohio-based AK Steel is shelling out $700mn for ownership of Severstal’s steel mill located in Dearborn, Mich., which supplies the Detroit auto industry. Meanwhile, Steel Dynamics will buy the mill located in Columbus, Miss., which supplies businesses from building houses to gas drilling, for $1.625bn.
The move, if completed, will make Steel Dynamics the fourth largest U.S. steel maker, and AK Steel will climb to fifth, trailing only U.S. Steel Corp., ArcelorMittal and Nucor Corp. The consolidation is expected to benefit U.S. steel companies, which have been hit by severe winter and global oversupply.
The transaction comes amid troubles in the Russian economy after a series of sanctions imposed by the U.S. and European Union as a result of Russia’s annexation of the Crimea region in Ukraine and a pro-Russian rebellion in Ukraine’s east that the Kremlin allegedly supports.