The Boards of Directors of SSAB AB and Rautaruukki Oyj have announced a plan to combine the two companies through the acquisition of Ruukki by SSAB. The combined company would be a Nordic and US-based steel company “with a global reach and cost-efficient and flexible production.” The proposed combination is expected to create substantial value for the shareholders in the combined company through the realisation of annual cost synergies of up to €150 million). The combined company will continue to serve mining customers with a broad offering within high strength steels, standard strip and plate products as well as tubular products. In mining specifically, SSAB’s Hardox range is particularly well known, used for LHD buckets, dump truck bodies, hopper and feeder lining plates and many other uses. Likewise Ruukki’s Raex range is widely used in similar mining applications.The Board of Directors of Rautaruukki has recommended the shareholders to accept the offer. The initial acceptance period will commence in late March or early April 2014 and is expected to close in late April or early May 2014. The cost synergies are expected to be realised through a more flexible and efficient production system, more efficient supply chain, purchasing optimisation and streamlined administration. The combined company will have steel production facilities in Sweden, Finland and the US with a combined annual steel production capacity of 8.8 Mt.The combination “will enhance the ability to invest in product development, R&D and close collaboration with customers” as well as having “a global geographic presence and be close to its customers in all regions.” SSAB’s construction related operations (Plannja) will be combined with Ruukki’s Building Products and Ruukki´s Building Systems operations to form a separate construction business division. This is expected to generate additional synergies. Sverker Martin-Löf, Chairman of SSAB’s Board of Directors, commented: “In the steel industry, a combination of SSAB and Rautaruukki has for long been considered logical and the time is now right to pursue this transaction. For SSAB, the proposed acquisition, which is accretive to SSAB´s shareholders, creates a much more flexible European manufacturing platform that positions the company to profitably meet customer demand in the long term.” Sakari Tamminen, President and CEO of Rautaruukki, commented: “I believe that the combination of Ruukki and SSAB gives an excellent opportunity to continue the rationalisation of the cost base of the companies and build a new Nordic steel producer, that is able to transit the steel business towards a global special steel company.”The global steel industry has over the past few years been characterised by overcapacity. Coupled with the challenging economic conditions, particularly in Europe, this has resulted in falling steel prices and lower, but also more volatile, demand. Adding to that the impact of continued high raw materials prices, profitability for steel companies has fallen.