Hamilton) Seven years after emerging from
creditor protection and embarking on a major turnaround, Stelco has announced
it will be acquired by Cleveland-Cliffs in a $3.4 billion deal.
In a statement Monday, the Hamilton, Ontario-based
steelmaker said it had agreed to sell all of its issued and outstanding common
shares at $70 each to Cleveland-Cliffs of Ohio, one of North America’s largest
steelmakers.
“I know that Cliffs will continue to build on the excellent work
and living environment we have created for all of our employees and continue to
be a reliable supplier to our valued customers, while preserving Stelco’s
stature and reputation in Canada and maintaining our Canadian national
position,” said Alan Kestenbaum, Stelco’s Chief Executive Officer.
As part of the deal, Stelco’s head office will remain in
Hamilton and the company will maintain “significant levels of employment” in
Canada, including retaining Canadians on its management team.
Cleveland-Cliffs President and CEO Lourenco Goncalves praised
Mr. Kestenbaum’s success in transforming “an underperforming asset under
previous ownership into a highly profitable, profit-driven business.”
The deal is expected to close in the fourth quarter of 2024.
This won’t be the first time Stelco has
been in foreign hands. U.S. Steel acquired the 114-year-old company in 2007,
just before the global financial crisis triggered a recession. In 2014, the
second-largest U.S. steelmaker placed its Canadian operations under creditor
protection.
Mr. Kestenbaum took the helm in 2017 (he left for a year in
2019), modernized Stelco’s blast furnaces and, through acquisitions, steered
the company toward increased steel production for automakers.
United Steelworkers International President David McCall
supported the sale to Cleveland-Cliffs, calling it “tremendous for the
resilience of manufacturing and union jobs” in North America.
“Cleveland-Cliffs has a proven track record of ensuring the
union always has a seat at the table, and this agreement is no different,” the
union leader said in a statement.
As of December, about 83 percent of Stelco’s 2,400 workers were
unionized.
Mergers and acquisitions in the sector
have dominated headlines over the past year as producers seek to consolidate in
response to cheap imports from China.
In August, Cleveland-Cliffs made a $7.25 billion hostile
takeover bid to acquire U.S. Steel. But U.S. Steel rejected the offer and opted
to buy Japan’s Nippon Steel for $14.9 billion. Nippon Steel is one of the
world’s largest steel producers by production volume.
This agreement is pending review by the Committee on Foreign
Investment in the United States.