Cleveland-Cliffs, a major player in the U.S. steel industry, has officially announced its agreement to acquire Stelco Holdings, a prominent Canadian steelmaker, for $2.8 billion. This marks Cleveland-Cliffs' first significant acquisition move since its bid to purchase U.S. Steel last year. The acquisition has been endorsed by the United Steelworkers (USW) union and is expected to be finalized in the last quarter of the year.
Cleveland-Cliffs expects the acquisition to immediately boost earnings per share in 2024 and 2025. The move comes after the company's failed $7.3 billion bid for U.S. Steel in August 2023. U.S. Steel rejected the offer and instead merged with Japanese steel giant Nippon Steel for $14.9 billion.
Stelco operates two major steelmaking facilities in Ontario, Canada: the Lake Erie Works and the Hamilton Works. As part of the acquisition, Cleveland-Cliffs shareholders will own 95% of the combined company, while Stelco shareholders will own 5%. Stelco will continue to operate as a wholly-owned subsidiary of Cleveland-Cliffs.
This strategic acquisition is expected to double Cleveland-Cliffs’ exposure to the flat-rolled spot market and leverage cost advantages in raw materials, energy, healthcare, and currency.
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