United States Steel Corp. has completed its acquisition of a 49.9 percent ownership interest in Big River Steel for approximately $700 million, which implies an enterprise value of $2.325 billion. The transaction finalizes U.S. Steel’s first step toward full ownership and consolidation of Big River.
As announced on Oct. 1, 2019, the transaction includes a call option that gives U.S. Steel the right to acquire the remaining 50.1 percent of Big River within four years at an agreed-upon price formula. Until that time Big River will operate independently. KM BRS LLC (a subsidiary of Koch Minerals LLC) and TPG Furnace L.P. (an affiliate of TPG Growth) remain preferred equity holders of Big River, along with the majority common ownership position held by company management and the Arkansas Teachers Retirement System.
“The closing of our investment in Big River brings us one step closer to creating a differentiated, world-competitive company that can offer our customers, employees and stockholders the ‘best of both’ integrated and mini mill steel making technology,” U.S. Steel President and CEO David B. Burritt said, in a statement. “We have done more than make an investment in the newest and most advanced flat-rolled mill in North America … we have invested in the future of U.S. Steel. We are gratified by the positive response we have received from our stakeholders recognizing the strategic rationale of this transaction since we announced it on Oct. 1.”
Using an equity method of accounting, U.S. Steel will recognize its share of Big River’s after tax net income or loss as well as the amortization of any basis differences due to the step-up to fair value of certain assets and liabilities attributable to Big River. The financial impact of this acquisition will begin to be reflected in U.S. Steel’s fourth quarter 2019 results.
