The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
Cliffs Natural Resources
has closed its acquisition of Consolidated Thompson Iron Mines.
That gives the company yet another reason to celebrate in the wake of the company being added to the Fortune 500 list for 2011. Cliffs is ranked No. 477 on the list with annual revenues of $4.7 billion for 2010. The company competes with other international mining and natural resources companies like
We currently have a $102 price estimate for Cliffs Natural Resources stock, about 15% above market price.
Cliffs announced its intention to acquire Canadian rival Consolidated Thompson Iron Mines Ltd in a $4.9 billion all-cash deal in January this year. The acquisition was aimed at consolidating Cliffs position as North America's largest producer of iron ore pellets with an added capacity of 8 million tons.
Additionally, the deal also gave Cliffs a better foothold on the Asian market by adding Wuhan Iron and Steel, one of China's biggest steel manufacturers, as its customer through existing long-term supply agreements between Wuhan and Consolidated Thompson.
The acquisition decision got shareholder approval in late February, after which it received the necessary clearances from the Canadian and Chinese governments in mid-April and early May respectively. After completing the remaining closing conditions, the deal closed on May 12 -- four months from start to finish.
We estimate that the new assets would contribute to about 8 million tons of iron ore to Cliffs' North American iron ore division in 2012. Capacity upgrades will add as much as 16 million tons of iron ore to the division's sales by the end of five years.
The largest producer of iron ore pellets in North America just got larger, officially.
See our full analysis for Cliffs Natural Resources stock
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