In an expansion deal that will mean a more direct market for a key Iron Range taconite producer, Cleveland-Cliffs has agreed to buy another Ohio company, AK Steel Holding, in a $1.1 billion stock deal.

With the purchase, Cliffs — which owns United Taconite, Northshore Mining and part of Hibbing Taconite in Minnesota and iron operations in Michigan — will create a fully integrated iron and steelmaking enterprise, company officials said on Tuesday.

AK Steel, based near Cincinnati, makes carbon and stainless steel tubing products, hot- and cold-stamped components and die design and tooling products.

“Together, Cliffs and AK Steel will have a presence across the entire manufacturing process, from [iron ore] mining to pelletizing to the development and production of finished, high-value steel products, including ‘next generation’ advanced high strength steels for automotive and other markets,” Cliffs officials said in a statement.

AK Steel has 9,500 employees and serves markets ranging from automotive makers to electrical power firms.

It has plants in the U.S., Canada and Mexico and has a presence in Western Europe.

“For Cliffs, we expect to realize immediate growth and a long-desired objective of a more diverse customer base, as well as more predictable cash flow generation due to the contracted nature of AK Steel’s sales of high-end automotive steel,” said Cleveland-Cliffs CEO Lourenco Goncalves.

He said the businesses were complementary and create a “compelling business model.”

The agreement calls for AK Steel shareholders to receive 0.4 shares of Cliffs common stock for each outstanding share of AK Steel common stock.

When the deal is completed, Cliffs shareholders will own about 68% of the combined company and AK Steel shareholders 32%.

The fixed exchange ratio implies $3.36 per share of AK Steel common stock and represents a premium of roughly 16% based on the closing share prices of Cliffs and AK Steel as of Monday.

Cliffs’ shares fell 11% Tuesday to close at $7.51. AK Steel’s shares rose 4% to $3.01.

The purchase of AK Steel marks the latest big move by Cleveland-Cliffs, and comes at a time when parts of the steel industry are feeling the effects of U.S. steel tariffs, retaliation from U.S. trading partners and slowing demand for some flat rolled and tubular steel products.

Cliffs shed its coal operations several years ago, closed its exhausted Empire Mine in the Upper Peninsula of Michigan in 2016 and expanded elsewhere.

Its Iron Range United Taconite entity in 2017 opened a $75 million Mustang “superflux” pellet plant in Forbes, Minn.

In September 2017, Cliffs bought the last 15% of the Tilden Mining Co. it didn’t own in Michigan from U.S. Steel for $105 million.

This year Cliffs invested $100 million to upgrade its Northshore Mining operation in Silver Bay, Minn., so it could make “DR-grade” iron-ore pellets. Next year, Cliffs is set to complete its new $700 million hot-briquetted iron plant in Toledo, Ohio.