Cleveland-Cliffs Inc. has agreed to acquire Stelco Holdings. The acquisition brings an additional 1,800 United Steelworkers (USW) employees into Cliffs’ workforce.
Under the terms of the agreement, Stelco shareholders will receive CAD $60 per Stelco common share in cash and 0.454 shares of Cliffs common stock per share of Stelco common stock (or CAD $10 per share as of July 12, 2024), representing a total consideration of CAD $70 per Stelco share. The transaction has received full support from David McCall, International President of the USW.
The transaction implies a total enterprise value of approximately $2.5 billion for Stelco and represents an acquisition multiple of 4.8x as of March 31. The acquisition is expected to be immediately accretive to 2024 and 2025 EPS.
Stelco is an integrated steelmaker consisting of two operational sites, both located in the province of Ontario: Lake Erie Works, the newest and lowest-cost integrated steelmaking facility in North America; and Hamilton Works, a downstream finishing and cokemaking facility. Stelco ships approximately 2.6 million net tons of flat-rolled steel annually, primarily hot-rolled steel to service center customers.
Upon closing of the transaction, Stelco is expected to continue operations as a wholly-owned subsidiary, preserving the name and legacy of the business.
