Luxembourg-based steel giant ArcelorMittal has announced a deal with Cleveland-Cliffs Inc, the largest American producer of iron ore pellets, to shed its US operations and subsidiaries. MarketWatch reported that ArcelorMittal said “about one-third of the consideration will be paid in cash upfront, while the remaining two-thirds in the form of equity. The enterprise value of the transaction is approximately $3.3 billion.”

Media including Reuters, citing sources “familiar with the matter”, had earlier reported on the possibility of a merger. The acquisition will be “transformative for Cleveland-Cliffs, which has a market value of $2.3 billion and had total long-term debt as of the end of June of $4.5 billion.”

ArcelorMittal’s US business has more than 18,000 employees and 25 facilities. The steel giant, headquartered in Luxembourg, said last year it was aiming to offload $2 billion of assets by the middle of 2021 to reduce its debt.

The company said it aims to redistribute some $500 million of the proceeds from the sale to shareholders via a share-buyback offer. Aditya Mittal, president and CFO said: “The transaction also completes our $2 billion asset portfolio optimisation target and enables us to return cash to shareholders.”

“This transaction is a unique opportunity for ArcelorMittal to unlock significant value for shareholders while retaining exposure to the North American economy through our high-quality NAFTA assets alongside a participation in what will be a stronger, better integrated, US business,” said Lakshmi Mittal, the steel company’s chairman and CEO.