Cleveland-Cliffs has reached an agreement to buy Ohio steelmaker AK Steel for about $1.1 billion in stock, the companies announced. The combined company will match Cleveland-Cliffs’ mining operations with AK Steel’s steel production.

Under the deal, AK Steel shareholders will receive 0.40 shares of Cliffs common stock for each outstanding share of AK Steel common stock. Based on current prices, Cliffs is paying $3.36 per share.

The companies said the valuation represents a premium of 27% based on the 30-day volume weighted average price of AK Steel common shares. AK Steel’s 52-week high prior to the deal annoucement was $3.30 per share.

Cleveland-Cliffs chairman and chief executive officer Lourenco Goncalves would become the head of the new company. AK Steel CEO Roger Newport will retire as CEO and director.

The announcement comes a day after President Donald Trump said he would “restore” tariffs on steel and aluminum imports from Brazil and Argentina, which had been exempted from tariffs last year.

AK Steel’s stock was more than twice its current value in early 2018 as the Trump administration pledged steel tariffs would help the industry. It reported a 96% drop in net income in the third quarter and announced, in January, that it would close a mill in Ashland, Kentucky, cutting 230 jobs. The company’s stock is down roughly two-thirds since Trump took office.

In a conference call Tuesday, Goncalves said the acquisition could allow the Ashland plant to reopen.

“It all depends on the clients,” he said. “We’d love to generate jobs there. But the clients need to understand that we don’t work for free, and we have to earn our cost of capital.”

Cleveland-Cliffs has secured $2 billion in financing from Credit Suisse in connection with a new asset-backed loan and the refinancing of AK Steel’s 2023 senior secured notes.

Cleveland-Cliffs’ stock fell 14% Tuesday following news of the agreement.

“Unfortunately, Wall Street sells first and thinks later,” Goncalves said.

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