Cleveland-Cliffs (CLF) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of Stelco for $2.5 billion strengthens leadership in North American flat-rolled steel, expands Canadian footprint, and adds 1,800 union jobs.

• Stelco's low-cost, high-margin operations and strong union culture align with the acquirer's values and operational model.

• Diversifies end-market exposure, increases spot market presence, and reduces reliance on automotive customers.

• Maintains Canadian national interests with guarantees of no layoffs, preservation of Stelco's name, legacy, and headquarters in Hamilton.

• Environmental performance and operational efficiency of Stelco support sustainability goals and industry-leading emissions technology.

Financial terms and conditions

• Stelco shareholders receive CAD $60.00 in cash and CAD $10.00 in stock per share, totaling CAD $70.00 per share, valuing Stelco at $2.5 billion enterprise value, or 4.8x LTM EBITDA with synergies.

• Funded with 86% cash and 14% stock, with committed financing from major banks and full underwritten commitments.

• Pro forma net leverage expected at 2.4x–2.5x EBITDA, with liquidity over $3.5 billion and focus on rapid de-levering post-close.

• Cliffs and Stelco shareholders will own about 95% and 5% of the combined company, respectively.

• Transaction expected to be immediately accretive to 2024 and 2025 EPS and Adjusted EBITDA margin.

Synergies and expected cost savings

• Estimated $120 million in annual cost savings, about 5% of target revenue, expected within 12 months post-close.

• Synergies from asset and CapEx optimization, procurement, SG&A, public company cost elimination, and increased throughput.

• No significant job cuts expected, except for some top management roles; union jobs and Canadian management to be retained.

• Additional cost advantages from coke plant excess capacity, favorable pellet supply, and use of HBI to increase throughput and reduce costs.

• History of outperforming initial synergy estimates in prior acquisitions.