United States Steel Corporation is buying a minority stake in an eastern Arkansas steel company for $700 million in what the national corporation calls “the first step” toward acquiring the business, company officials said Tuesday.
Big River Steel, based in Osceola, will give U.S. Steel minority interest in its scrap recycling and steel production business, according to a news release from the Arkansas company. Under the agreement, the two companies will form a joint venture with U.S. Steel receiving a 49.9% ownership interest. It will also have an option to acquire the remaining 50.1%.
The total enterprise value of the transaction is $2.325 billion, according to the 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," David Stickler, chief executive officer of Big River Steel, said in a statement. "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 steel making with the best of electric arc furnace mini mill steel making."
The Osceola-based company, which began construction in 2014 and operation in 2017, is the “largest industrial project in the history of the state of Arkansas,” according to its website.
Big River Steel also has the world’s first “flex mill,” which combines the capabilities of an integrated mill with “the nimbleness and technological advancements” of a mini mill, and is the only steel production facility to be LEED certified, the website states.
Big River Steel is working on a project to double its steel production capacity from 1.65 million tons to 3.3 million tons of flat-rolled steel, the release states. The investment by U.S. Steel will allow them to produce higher grades of electrical steel, used in energy-efficiency projects and hybrid and electric vehicles.
Headquartered in Pennsylvania, Pa., integrated steel producer and Fortune 250 company U.S. Steel has operations across the United States and in central Europe, according to the company’s website and Tuesday’s release. The corporation began in 1901.
A release by U.S. Steel states the investment expands the company’s capability and geographic reach and would position U.S. Steel to reach as much as $1 billion in capital and operational cash improvements by 2022.
“Big River operates the most advanced, state-of-the-art and sustainable mill in North America,” David B. Burritt, President and CEO of U.S. Steel, said in the release. “And our investment would ultimately strengthen our competitive positioning in highly strategic steel-end markets, creating an unmatched value proposition for our stakeholders.”