Cleveland-Cliffs Acquires Stelco in $2.5 Billion Deal, Expanding North American Reach

Cleveland-Cliffs Inc. has completed its acquisition of Stelco Holdings Inc., a Canadian steel producer, in a transaction valued at approximately $2.5 billion. The deal, finalized on November 1, 2024, enhances Cleveland-Cliffs' position as the largest flat-rolled steel producer in North America and expands its geographical presence into Canada.

Under the terms of the agreement, Stelco shareholders received CAD $60.00 in cash and 0.454 shares of Cleveland-Cliffs common stock per Stelco share, totaling CAD $70.00 per share. This consideration represents a 300% premium over Stelco's initial public offering price in 2017. The acquisition is expected to generate approximately $120 million in annual cost savings and is anticipated to be immediately accretive to Cleveland-Cliffs' earnings per share for 2024 and 2025.

Stelco operates two facilities in Ontario: Lake Erie Works, recognized as one of the newest and lowest-cost integrated steelmaking facilities in North America, and Hamilton Works, a downstream finishing and cokemaking facility. These operations will continue as a wholly-owned subsidiary of Cleveland-Cliffs, preserving the Stelco name and its Canadian legacy.

Lourenco Goncalves, Chairman, President, and CEO of Cleveland-Cliffs, emphasized the strategic importance of the acquisition, stating, "By bringing Stelco into the Cliffs family, we are building on our commitment to integrated steelmaking and good-paying union jobs in North America." He added that the deal allows the company to "further diversify our customer base and lower our cost structure."

Alan Kestenbaum, Executive Chairman and CEO of Stelco, expressed confidence in the transaction, noting, "Cliffs, led by industry leader Lourenco Goncalves, has made it clear both in words and in practice that they share many of the core values that have led to Stelco’s recent success." He added, "I am confident that the strong legacy of Stelco, our partners, and our employees are in very good and strong hands going forward."

The acquisition received full support from the United Steelworkers (USW) union. David McCall, International President of the USW, stated, "On behalf of our entire membership, I am excited for this transaction and proud to support a deal that is great for the resilience of manufacturing and union jobs in North America." He highlighted Cleveland-Cliffs' proven track record of ensuring the union has a seat at the table.

Cleveland-Cliffs plans to invest at least CAD $60 million over the next three years in Stelco's facilities and aims to increase steel production beyond current levels. The company also committed to maintaining significant employment levels in Canada and preserving existing local supplier arrangements.

This acquisition follows Cleveland-Cliffs' previous attempts to expand its market presence. In August 2023, the company made an unsolicited $7.3 billion offer for U.S. Steel, which was rejected. The successful acquisition of Stelco marks a significant milestone in Cleveland-Cliffs' growth strategy, enhancing its operational capabilities and market position in the North American steel industry.

The completion of this transaction underscores the ongoing consolidation within the steel industry, aiming to create more competitive and resilient entities capable of navigating market fluctuations and global competition.