Cleveland-Cliffs to Acquire Stelco Holdings (TSX: STLC) in C$3.4 Billion Deal

2 min read | July 16, 2024 03:19 AM EDT | By Team Kalkine Media

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Cleveland-Cliffs to Acquire Stelco Holdings (TSX: STLC) in C$3.4 Billion Deal — Image source: @Tumisu/Pixabay

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Stelco Holdings Inc. (TSX: STLC) has announced a definitive agreement with Cleveland-Cliffs Inc. (NYSE:CLF) under which Cleveland-Cliffs will acquire all issued and outstanding common shares of Stelco. The transaction, valued at approximately C$3.4 billion, underscores a strategic move to consolidate operations and expand market presence.

Transaction Details

Cleveland-Cliffs will purchase Stelco's shares at C$70.00 each, comprising C$60.00 in cash and 0.454 of a Cleveland-Cliffs common stock share per Stelco share. This valuation equates to a total consideration of C$70.00 per share based on Cliffs' closing stock price on July 12, 2024. The offer represents an 87% premium over Stelco’s closing share price of C$37.36 on July 12, 2024, and a 37% premium over Stelco’s 52-week high.

The total enterprise value of the transaction is approximately C$3.4 billion. Major shareholders, including Fairfax Financial Holdings, Lindsay Goldberg LLC, Alan Kestenbaum, and other Stelco directors and executives, holding about 45% of Stelco's outstanding shares, have entered into agreements to vote in favor of the deal, subject to customary exceptions.

Commitments and Community Impact

Despite the acquisition, Stelco’s headquarters will remain in Hamilton, Ontario, and the company’s name and legacy will be preserved across Hamilton, Nanticoke, and Canada. Cleveland-Cliffs has committed to maintaining Stelco’s significant operations in these locations and plans to invest at least C$60 million in capital over the next three years to boost steel production beyond current levels.

Employment levels in Canada will be upheld, with Canadian representation on Stelco's management team continuing. Cliffs has also pledged to maintain existing local supplier arrangements, ensuring stability for businesses in the region.

Academic and Community Collaborations

Cleveland-Cliffs values Stelco's ongoing partnerships with McMaster University and CanmetMATERIALS and will uphold existing research chairs with McMaster University. Additionally, Cliffs plans to enhance Stelco’s charitable contributions by C$2 million annually, directed by Stelco’s management team, continuing Stelco's tradition of community support.

The company's engagement with the Hamilton Tiger-Cats and Forge FC will persist, maintaining its 40% equity interest and master lease of Tim Hortons Field. Community programs, including the Tiger-Cats High School Mentorship Program, will also be sustained.

Sustainability and Future Plans

Cleveland-Cliffs is committed to operating Stelco’s business in alignment with the United Nations’ Sustainable Development Goals (UN SDGs) and will ensure that Canadian operations adhere to these sustainability priorities.

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