AK Steel (AKS)

[N4longterm]

My only concern is that the numbers stay in balance. I have seen buyouts where the values have gone out of alignment, but I don't foresee that happening here. There are 3 ways the balance could go askew;

1) AKS could rise at a higher rate than CLF. If that happens, I have an AKS sell order in at a decent profit level for me.

2) CLF could drop faster than AKS. If this happens, I may pick up some CLF. I still think the surviving company will do better in the long run and I prefer dividend stocks.

3) Of course there is also the possibility that AKS drops faster than CLF, which would change the share ratio. In that case I guess I'll 'drop back 10 and punt'

I have been in the steel distribution business for over 35 years, not the same market that AKS or CLF supply, but the reality is the same. This buyout will benefit both companies in that their distributors will have a broader range of product. It is getting harder to have multiple vendors for similar but different products. Most in the steel industry require minimum purchasing based on tonnage and, at today's price levels, it makes sense to buy from suppliers that let you mix-&-match product lines to meet minimums. I actually expect more consolidation within the industry for this reason.