ArcelorMittal, in a statement on Monday, said that around one third of the consideration is in upfront cash -- $505 million and the remaining two-third of the consideration is in the form of equity.

Further, Cleveland-Cliffs will assume the liabilities of ArcelorMittal USA, including net liabilities of approximately $0.5 billion and pensions and other post-employment benefit liabilities which Cleveland-Cliffs values at $1.5 billion.

Cleveland-Cliffs said in a statement that it will acquire ArcelorMittal USA on a cash-free and debt-free basis, with a combination of 78.2 million shares of Cleveland-Cliffs common stock, non-voting preferred stock with an approximate aggregate value of $373 million, and $505 million in cash.

With the transaction, ArcelorMittal USA has achieved "favourable" valuation due to the high synergistic potential of the combined company, the ArcelorMittal statement said.

Lakshmi Mittal, Chairman and CEO of ArcelorMittal, said: "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."

"I would like to thank all employees of ArcelorMittal USA for their hard work in ensuring the business maintained its reputation as a trusted, quality supplier of steels for American manufacturing. I am confident you will have a bright future with Cleveland-Cliffs," he said.

Aditya Mittal, President and CFO, ArcelorMittal, said that the transaction also completes the steel major's $2 billion asset portfolio optimisation target and enables it to return cash to the shareholders.

Lourenco Goncalves, President and CEO of Cleveland-Cliffs, said: "Steel-making is a business where production volume, operational diversification, dilution of fixed costs, and technical expertise matter above all else, and this transaction achieves all of these. ArcelorMittal is a world class organisation that we have long admired as our customer and our partner, and we know for a fact that they have taken good care of their US assets."