Cleveland-Cliffs acquires Stelco for approximately $2.5B

Cleveland-Cliffs has entered into a definitive agreement to acquire Stelco, an integrated and independent steelmaker with integrated steelmaking facilities in in the province of Ontario. The acquisition brings an additional 1,800 United Steelworkers union employees into Cliffs’ workforce. Stelco shareholders will receive C$60.00 per Stelco common share in cash and 0.454 shares of Cliffs common stock per share of Stelco common stock, representing a total consideration of C$70.00 per Stelco share. The transaction has received full support from David McCall, International President of the USW union. The transaction implies a total enterprise value of approximately $2.5B for Stelco and represents an acquisition multiple of 4.8x 3/31/24 LTM Adjusted EBITDA with synergies. Cliffs has a line of sight to the achievement of approximately $120M of estimated annual cost savings with no impact to union jobs. The acquisition is expected to be immediately accretive to 2024 and 2025 EPS. Upon completion, Cliffs shareholders will own approximately 95% and Stelco shareholders will own approximately 5% of the combined company, on a fully diluted basis. Stelco ships approximately 2.6 million net tons of flat-rolled steel annually. Upon closing, Stelco is expected to continue operations as a wholly-owned subsidiary. Stelco’s headquarters will remain in Hamilton and the name and legacy of Stelco will be preserved in Hamilton, Nanticoke, and Canada. The transaction has been unanimously approved by Cliffs’ and Stelco’s respective Boards. The transaction is expected to close in Q4.