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Cleveland-Cliffs (NYSE:CLF) -5.7% pre-market Monday after saying it agreed to acquire Canadian steel producer Stelco Holdings (OTCPK:STZHF) in a stock-and-cash deal valued at ~$2.5B.
Under the deal terms, Cleveland-Cliffs (CLF) will pay C$70/share, consisting of C$60/share in cash plus 0.454 common shares for each Stelco (OTCPK:STZHF) share owned, representing an 87% premium to Stelco’s C$37.36 closing share price on July 12.
Cliffs (CLF) said the deal provides a clear line of sight to the achievement of $120M of estimated annual cost savings, and it expects the acquisition will be immediately accretive to 2024 and 2025 earnings.
The company said the deal has the full support of the United Steelworkers union.
Stelco (OTCPK:STZHF) ships ~2.6M net tons/year of flat-rolled steel, primarily hot-rolled steel to service center customers, and Cliffs (CLF) said the acquisition expands its steelmaking footprint and doubles its exposure to the flat-rolled spot market, with cost advantages in raw materials, energy, healthcare, and currency.