Annual report pursuant to Section 13 and 15(d)

ACQUISITIONS (Tables)

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ACQUISITIONS (Tables)
 12 Months Ended
Dec. 31, 2021
Business Combinations [Abstract]  
Schedule of Fair Value of Purchase Consideration
The fair value of the total purchase consideration was determined as follows:
(In Millions)
Cash consideration (subject to customary working capital adjustments) $ 775 
Fair value of settlement of a pre-existing relationship (20)
Total purchase consideration $ 755 
The preliminary purchase price allocation to assets acquired and liabilities assumed in the FPT Acquisition was:
(In Millions)
Initial Allocation of Consideration
Cash and cash equivalents $ 9 
Accounts receivable, net 233 
Inventories 137 
Other current assets 4 
Property, plant and equipment 179 
Other non-current assets 74 
Accounts payable (122)
Accrued employment costs (8)
State and local taxes (1)
Other current liabilities (8)
Other non-current liabilities (21)
Net identifiable assets acquired 476 
Goodwill 279 
Total net assets acquired $ 755 
The fair value of the total purchase consideration was determined as follows:
(In Millions)
Fair value of Cliffs common shares issued $ 990 
Fair value of Cliffs Series B Participating Redeemable Preferred Stock issued 738 
Fair value of settlement of a pre-existing relationship 237 
Cash consideration 639 
Total purchase consideration $ 2,604 
The fair value of Cliffs common shares issued was calculated as follows:
Number of Cliffs common shares issued 78,186,671
Closing price of Cliffs common share as of December 9, 2020 $ 12.66 
Fair value of Cliffs common shares issued (in millions) $ 990 
The fair value of Cliffs Series B Participating Redeemable Preferred Stock issued was calculated as follows:
Number of Cliffs Series B Participating Redeemable Preferred Stock issued 583,273 
Redemption price per share as of December 9, 2020 $ 1,266 
Fair value of Cliffs Series B Participating Redeemable Preferred Stock issued (in millions) $ 738 
The fair value of the cash consideration was comprised of the following:
(In Millions)
Cash consideration pursuant to the AM USA Transaction Agreement $ 505 
Cash consideration for purchase of the remaining JV partner's interest of Kote and Tek 182 
Total cash consideration receivable (48)
Total cash consideration $ 639 
The cash portion of the purchase price was subject to customary working capital adjustments, and the working capital adjustments were finalized during the second quarter of 2021. We made certain elections under Section 338(h)(10) of the IRC with respect to entities acquired in connection with the AM USA Transaction, which did not change the final cash consideration.
The fair value of the settlement of a pre-existing relationship was comprised of the following:
(In Millions)
Accounts receivable $ 97 
Freestanding derivative asset from customer supply agreement 140 
Total fair value of settlement of a pre-existing relationship $ 237 
The fair value of the total purchase consideration was determined as follows:
(In Millions)
Fair value of AK Steel debt $ 914 
Fair value of Cliffs common shares issued for AK Steel outstanding common stock 618 
Other 3 
Total purchase consideration $ 1,535 
The fair value of AK Steel's debt included in the consideration was calculated as follows:
(In Millions)
Credit Facility $ 590 
7.500% Senior Secured Notes due July 2023 324 
Fair value of debt included in consideration $ 914 
Summary of Purchase Price Allocated to Identifiable Intangible Assets and Liabilities Acquired
The preliminary purchase price allocated to identifiable intangible assets acquired was:
(In Millions) Weighted Average Life (In Years)
Customer relationships $ 18  15
Supplier relationships 18  18
Trade names and trademarks 7  15
Total identifiable intangible assets $ 43  16
The purchase price allocated to identifiable intangible assets and liabilities acquired was:
(In Millions) Weighted Average Life (In Years)
Intangible assets:
Customer relationships $ 77  18
Developed technology 60  17
Trade names and trademarks 11  10
Total identifiable intangible assets $ 148  17
Intangible liabilities:
Above-market supply contracts $ (71) 12
Summary of the Purchase Price Allocation to Assets Acquired and Liabilities Assumed The following is a summary of the purchase price allocation to assets acquired and liabilities assumed in the AM USA Transaction:
(In Millions)
Initial Allocation of Consideration Measurement
Period Adjustments		 Final Allocation Consideration as of December 31, 2021
Cash and cash equivalents $ 35  $ —  $ 35 
Accounts receivable, net 349  (3) 346 
Inventories 2,115  14  2,129 
Other current assets 34  2  36 
Property, plant and equipment 4,017  387  4,404 
Deferred income taxes —  285  285 
Other non-current assets 158  7  165 
Accounts payable (736) 8  (728)
Accrued employment costs (271) 5  (266)
State and local taxes (76) —  (76)
Other current liabilities (453) 23  (430)
Pension liability, non-current (730) —  (730)
OPEB liability, non-current (2,465) —  (2,465)
Other non-current liabilities (598) (171) (769)
Noncontrolling interest (13) 21  8 
Net identifiable assets acquired 1,366  578  1,944 
Goodwill 1,230  (570) 660 
Total net assets acquired $ 2,596  $ 8  $ 2,604 
The following is a summary of the purchase price allocation to assets acquired and liabilities assumed in the AK Steel Merger:
(In Millions)
Initial Allocation of Consideration Measurement Period Adjustments Final Allocation of Consideration as of March 31, 2021
Cash and cash equivalents $ 38  $ 1  $ 39 
Accounts receivable, net 666  (2) 664 
Inventories 1,563  (243) 1,320 
Other current assets 68  (16) 52 
Property, plant and equipment 2,184  90  2,274 
Deferred income taxes —  69  69 
Other non-current assets 475  (4) 471 
Accounts payable (636) (8) (644)
Accrued employment costs (94) 1  (93)
State and local taxes (35) 4  (31)
Other current liabilities (276) 2  (274)
Long-term debt (1,179) —  (1,179)
Pension liability, non-current (473) 10  (463)
OPEB liability, non-current (400) (8) (408)
Other non-current liabilities (507) 72  (435)
Noncontrolling interest —  (1) (1)
Net identifiable assets acquired 1,394  (33) 1,361 
Goodwill 141  33  174 
Total net assets acquired $ 1,535  $ —  $ 1,535 
Schedule of Common Shares Issues upon Completion of Merger
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 was calculated as follows:
(In Millions,
Except Per Share Amounts)
Number of shares of AK Steel common stock issued and outstanding 317 
Exchange ratio 0.400 
Shares of Cliffs common shares issued to AK Steel stockholders 127 
Price per share of Cliffs common shares $ 4.87 
Fair value of Cliffs common shares issued for outstanding AK Steel common stock $ 618 
Summary of Unaudited Pro Forma Financial Information
The following table provides unaudited pro forma financial information, prepared in accordance with Topic 805, as if ArcelorMittal USA and AK Steel had been acquired as of January 1, 2019:
(In Millions)
Year Ended December 31,
2020 2019
Revenues $ 12,837  $ 17,163 
Net income (loss) attributable to Cliffs shareholders (520) (11)
The following table provides unaudited pro forma financial information, prepared in accordance with Topic 805, as if FPT had been acquired as of January 1, 2020:
(In Millions)
Year Ended December 31,
2021 2020
Revenues $ 21,701  $ 13,549 
Net income (loss) attributable to Cliffs shareholders 3,074  (526)