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Annual report pursuant to Section 13 and 15(d)

ACQUISITIONS (Tables)

v3.20.4
ACQUISITIONS (Tables)
 12 Months Ended
Dec. 31, 2020
Business Combinations [Abstract] Ìý
Schedule of Business Acquisitions, by Acquisition
The fair value of the total purchase consideration was determined as follows:
(In Millions)
Fair value of Cliffs common shares issued $ 990Ìý
Fair value of Series B Participating Redeemable Preferred Stock issued 738Ìý
Fair value of settlement of a pre-existing relationship 237Ìý
Cash consideration (subject to customary working capital adjustments) 631Ìý
Total purchase consideration $ 2,596Ìý
The fair value of Cliffs common shares issued is calculated as follows:
Number of Cliffs common shares issued 78,186,671
Closing price of Cliffs common share as of December 9, 2020 $ 12.66Ìý
Fair value of Cliffs common shares issued (in millions) $ 990Ìý
The fair value of Cliffs Series B Participating Redeemable Preferred Stock issued is calculated as follows:
Number of Cliffs Series B Participating Redeemable Preferred Stock issued 583,273Ìý
Redemption price as of December 9, 2020 $ 1,266Ìý
Fair value of Cliffs Series B Participating Redeemable Preferred Stock issued (in millions) $ 738Ìý
The fair value of the estimated cash consideration is comprised of the following:
(In Millions)
Cash consideration pursuant to the AM USA Transaction Agreement $ 505Ìý
Cash consideration for purchase of the remaining JV partners' interest of Kote and Tek 182Ìý
Estimated total cash consideration receivable (56)
Total estimated cash consideration $ 631Ìý
The cash portion of the purchase price is subject to customary working capital adjustments.
The fair value of the settlement of a pre-existing relationship is comprised of the following:
(In Millions)
Accounts receivable $ 97Ìý
Freestanding derivative asset from customer supply agreement 140Ìý
Total fair value of settlement of a pre-existing relationship $ 237Ìý
The fair value of the total purchase consideration was determined as follows:
(In Millions)
Fair value of AK Steel debt $ 914Ìý
Fair value of Cliffs common shares issued for AK Steel outstanding common stock 618Ìý
Other 3Ìý
Total purchase consideration $ 1,535Ìý
The fair value of AK Steel's debt included in the consideration is calculated as follows:
(In Millions)
Credit Facility $ 590Ìý
7.50% Senior Secured Notes due July 2023 324Ìý
Fair value of debt included in consideration $ 914Ìý
Schedule of Business Acquisitions by Acquisition, Equity Interest Issued or Issuable
The fair value of Cliffs common shares issued for outstanding shares of AK Steel common stock and with respect to Cliffs common shares underlying converted AK Steel equity awards that vested upon completion of the AK Steel Merger is calculated as follows:
(In Millions, Except Per Share Amounts)
Number of shares of AK Steel common stock issued and outstanding 317Ìý
Exchange ratio 0.400Ìý
Shares of Cliffs common shares issued to AK Steel stockholders 127Ìý
Price per share of Cliffs common shares $ 4.87Ìý
Fair value of Cliffs common shares issued for outstanding AK Steel common stock $ 618Ìý
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed
The preliminary purchase price allocation to assets acquired and liabilities assumed in the AM USA Transaction was:
(In Millions)
Cash and cash equivalents $ 35Ìý
Accounts receivable, net 349Ìý
Inventories 2,115Ìý
Income tax receivable, current 12Ìý
Other current assets 22Ìý
Property, plant and equipment 4,017Ìý
Other non-current assets 158Ìý
Accounts payable (758)
Accrued employment costs (271)
State and local taxes (76)
Pension and OPEB liabilities, current (109)
Other current liabilities (322)
Pension and OPEB liabilities, non-current (3,195)
Other non-current liabilities (598)
Noncontrolling interest (13)
Net identifiable assets acquired 1,366Ìý
Goodwill 1,230Ìý
Total net assets acquired $ 2,596Ìý
The preliminary purchase price allocation to assets acquired and liabilities assumed in the AK Steel Merger was:
(In Millions)
Initial Allocation of Consideration Measurement Period Adjustments Updated Allocation
Cash and cash equivalents $ 38Ìý $ 1Ìý $ 39Ìý
Accounts receivable, net 666Ìý (2) 664Ìý
Inventories 1,563Ìý (243) 1,320Ìý
Income tax receivable, current 3Ìý —Ìý 3Ìý
Other current assets 65Ìý (16) 49Ìý
Property, plant and equipment 2,184Ìý 128Ìý 2,312Ìý
Deferred income taxes —Ìý 30Ìý 30Ìý
Other non-current assets 475Ìý (3) 472Ìý
Accounts payable (636) (8) (644)
Accrued employment costs (94) 1Ìý (93)
State and local taxes (35) 4Ìý (31)
Pension and OPEB liabilities, current (75) (3) (78)
Other current liabilities (201) 5Ìý (196)
Long-term debt (1,179) —Ìý (1,179)
Pension and OPEB liabilities, non-current (873) 2Ìý (871)
Other non-current liabilities (507) 72Ìý (435)
Noncontrolling interest —Ìý (1) (1)
Net identifiable assets acquired 1,394Ìý (33) 1,361Ìý
Goodwill 141Ìý 33Ìý 174Ìý
Total net assets acquired $ 1,535Ìý $ —Ìý $ 1,535Ìý
Finite-Lived and Indefinite-Lived Intangible Assets Acquired as Part of Business Combination
The preliminary purchase price allocated to identifiable intangible assets and liabilities acquired was:
(In Millions) Weighted Average Life (In Years)
Intangible assets:
Customer relationships $ 77Ìý 18
Developed technology 60Ìý 17
Trade names and trademarks 11Ìý 10
Total identifiable intangible assets $ 148Ìý 17
Intangible liabilities:
Above-market supply contracts $ (71) 12
Business Acquisition, Pro Forma Information
The following table provides unaudited pro forma financial information, prepared in accordance with Topic 805, for the years ended DecemberÌý31, 2020 and 2019, as if ArcelorMittal USA and AK Steel had been acquired as of January 1, 2019:
(In Millions)
Year Ended December 31,
2020 2019
Revenues $ 12,837Ìý $ 17,163Ìý
Net income (loss) attributable to Cliffs shareholders (520) (11)