FX.co ★ Cleveland-Cliffs To Buy Stelco For $2.5 Bln In Cash, Stock

Cleveland-Cliffs Inc. (CLF), the prominent American steel manufacturer, announced on Monday its agreement to acquire Stelco Holdings Inc., a leading Canadian steel company, at a price of C$70 per share, payable in both cash and stock.

According to the transaction terms, Stelco shareholders will receive $60.00 per share in cash along with 0.454 shares of Cleveland-Cliffs for each Stelco share they hold, or alternatively, C$10.00 per share, effective July 12, 2024.

This acquisition places Stelco at a total enterprise value of approximately $2.5 billion, equivalent to C$3.4 billion, and reflects an acquisition multiple of 4.8 times the Last Twelve Months (LTM) Adjusted EBITDA as of March 31, 2024, inclusive of synergies.

Cleveland-Cliffs anticipates that this acquisition will have an immediate positive impact on the company's earnings for 2024 and 2025.

The transaction is projected to close in the fourth quarter of 2024, after which Stelco will operate as a subsidiary of Cleveland-Cliffs.

"The enterprise value of this acquisition is considerably lower than the cost of creating a comparable new mill in the United States. Additionally, Stelco's cost structure is more advantageous compared to that of a new U.S. mill. Stelco exemplifies excellent Union relations, employee treatment, and cost efficiency, making it an ideal match for Cleveland-Cliffs and our corporate ethos," remarked Lourenco Goncalves, Chairman, President, and CEO of Cleveland-Cliffs.