Big River Steel, Osceola, Arkansas, has announced that it has entered into an agreement with Pittsburgh-based United States Steel Corp. in which Big River Steel will receive $700 million in cash in return for a minority ownership interest in its scrap recycling and steel production company. Under terms of the transaction, which assumes a $2.325 billion enterprise value, the companies will form a joint venture under which U.S. Steel will hold a 49.9 percent ownership interest, Big River Steel reports in a news release.
As part of its investment, U.S. Steel will hold an option to acquire the remaining 50.1 percent. Big River Steel’s original owners will also hold certain options related to the future ownership make up of Big River Steel, should U.S. Steel choose not to exercise its option.
Big River’s Osceola-based Flex Mill is a LEED-certified steel mill and is the newest and one of the most technologically advanced flat-rolled mills in North America, according to a Big River Steel news release. Since production began in early 2017, Big River has positioned itself as a premier steel producer in terms of profitability, product quality, employee productivity and environmental sustainability.
Big River’s early success and entrepreneurial culture has led to commencement of construction on a project that will double Big River Steel’s production capacity from 1.65 million tons to 3.3 million tons of flat-rolled steel. This investment will facilitate the company’s ability to produce even higher grades of electrical steel, demand for which is expected to increase with continued focus on energy efficiency and the increase in hybrid and electric vehicle sales, the company reports in a news release.
“Five years ago we started Big River Steel with five employees with big ideas and today we are partnering with a company started by Andrew Carnegie 118 years ago,” says David Stickler, chief executive officer of Big River Steel. “As partners with U.S. Steel, we intend to prove to the world that the best way to make steel is by combining the best of traditional integrated steelmaking with the best of electric arc furnace mini mill steel making.”