Hamilton steelmaker Stelco sold to Cleveland-Cliffs for $3.4 billion
The company will remain headquartered in Ontario and maintain ”significant employment levels” in Canada.
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The company will remain headquartered in Ontario and maintain ”significant employment levels” in Canada.
Seven years after it climbed out of creditor protection and embarked on a major turnaround, Stelco Holdings Inc. said it will be acquired by Cleveland-Cliffs Inc. in a $3.4-billion deal.
In a release Monday, the storied Hamilton, Ont.-based steelmaker said it agreed to sell all issued and outstanding common shares for $70 per share to Ohio-based Cleveland-Cliffs, one of North America’s largest steel manufacturers.
“I know that Cliffs will continue to build upon the excellent work and life environment we have created for all of our employees, and continue to be a reliable supplier to our valued customers, while maintaining Stelco’s stature and reputation in Canada and maintaining our Canadian national interests,” said Stelco chief executive Alan Kestenbaum.
As part of the agreement, Stelco’s headquarters will stay in Hamilton and the company will maintain “significant employment levels” in Canada and include Canadians in its management team.
Cleveland-Cliffs CEO Lourenco Goncalves said Kestenbaum had managed to turn an “underperforming asset under previous ownership into a very cost-efficient and profit-oriented company.”
The deal is expected to close in the fourth quarter of 2024.
This will not be the first time Stelco has come under foreign ownership. U.S. Steel acquired the 114-year-old company in 2007, right before the global financial crisis set off a recession. In 2014, America’s second-largest steelmaker put its Canadian operations into creditor protection.
Kestenbaum took the reins in 2017 (aside from a one-year departure around 2019), upgraded Stelco’s blast furnaces and, via acquisitions, steered the company toward more steel output for automakers.
United Steelworkers international president David McCall supported the sale to Cleveland-Cliffs, calling it “great for the resilience of manufacturing and union jobs” in North America.
“Cleveland-Cliffs has a proven track record of making sure the union always has a seat at the table, and this deal was no different,” the union head said in a release.
About 83% of Stelco’s 2,400 workers were unionized as of December.
Mergers and acquisitions in the industry have made headlines over the past year, as producers look to consolidate in response to cheap imports from China.
In August, Cleveland-Cliffs made a hostile, US$7.25-billion offer for U.S. Steel composed of cash and stock. But U.S. Steel rejected the bid and opted instead for a US$14.9-billion buyout by Japan’s Nippon Steel, one of the largest steelmakers in the world by production volume.
That agreement is pending review by the Committee on Foreign Investment in the United States, an inter-agency committee.
Several news outlets also reported last year that Stelco and an unnamed partner were considering an offer for U.S. Steel.
Stelco runs two sites in Ontario: a steel mill at Lake Erie Works and a coke plant and finishing operation at Hamilton Works.
National Bank analyst Maxim Sytchev called the Cleveland-Cliffs deal “a logical industry development.”
“We fully expect the deal to be reviewed, but one would assume that the backdrop would be less contentious than U.S. Steel / Nippon, given the already integrated nature of the North American supply chain, NAFTA, etc.,” he said in a note to investors.
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