United States Steel Corp. of Pittsburgh said Tuesday that it has purchased the remaining stake in Big River Steel LLC for $774 million cash.
The deal comes a little more than a year after the publicly traded steel giant announced a $700 million, 49.9% ownership interest in the Osceola plant, a move it said would pave the way for the company's full ownership within four years. The Wall Street Journal, citing an unnamed source, reported Tuesday that recent higher steel prices helped U.S. Steel raise enough cash to complete the deal sooner than expected.
The deal is set to close in the first quarter of 2021.
"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," Big River Steel CEO David Stickler said in a news release.
"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."
U.S. Steel called Big River Steel "North America's most advanced flat-rolled mini mill," and said taking full ownership will create "a more competitive, agile and customer-centric organization" to serve the southern U.S. and Mexico automotive markets.
U.S. Steel President and CEO David B. Burritt called the acquisition a "cornerstone" of his company's strategy.
"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," he said.
On a conference call Tuesday morning, Burritt added that his company's collaborations with Big River over the last year "just scratches the surface" of what the fully combined company will be able to do.
"Once we're able to fully collaborate, we believe we will find new ways to better serve our customers and optimize our operations," he said.
Among those initiatives, Burritt said, is providing "greener steel" through Big River's LEED-certified mill, which will help U.S. Steel customers "de-carbonize" their products. It will also help the company meet continued demand for steel products — demand that has remained steady even amid the COVID-19 pandemic.
"We see steel demand continuing to strengthen, both domestically and in Europe, particularly in key customer driven end markets such as automotive, appliances and packaging," he said.
Last month, Big River announced that its $716 million expansion had wrapped up early, doubling the capacity of its scrap metal recycling and flat-rolled steel production facility. On Tuesday, Burritt touted the expansion as coming in "under budget and ahead of schedule."
At $1.3 billion, the Big River Steel plant was a major economic development project assisted by the Arkansas Economic Development Commission and the state Legislature, which in 2013 approved a multimillion-dollar package of incentives for the plant, including a $125 million bond issue under Amendment 82 of the Arkansas Constitution — the first time the "superproject" legislation was implemented.
In 2014, Arkansas Teacher Retirement System trustees authorized investing in Big River Steel. Koch Minerals, a subsidiary of Koch Industries of Wichita, Kansas, was an early — and major — investor in Big River Steel.
Construction on Big River Steel began in September 2014, and the company processed its first batch of steel in 2016. It aims to produce 1.6 million tons of niche and specialty steel for sale in North America.
The plant is located in Mississippi County, which is among the largest steel-producing counties in the country, and employs about 650 people. Nucor has a three-decade history there, operating four facilities and employing nearly 1,700 workers.
Clint Rhoden, executive director of ATRS, said in email to Arkansas Business that the system has about a $150 million equity investment in Big River, and is expecting about $280 million to be distributed to ATRS after the sale is final.
"The early estimate is a 15% return for the equity investment," Rhoden said. "The return estimate will change based on the timing of the distribution."