Cleveland-Cliffs Inc. (NYSE:CLF), a major player in the metal mining industry, has finalized the acquisition of Stelco Holdings Inc., a Canadian steel producer. The transaction was completed today, as per the terms of the arrangement agreement dated July 14, 2024.
Under the agreement, each outstanding common share of Stelco was exchanged for C$60.00 in cash and 0.454 of a Cleveland-Cliffs common share. The cash and stock transaction provided immediate and certain value to Stelco shareholders. Additionally, Stelco's outstanding equity awards were settled in accordance with the arrangement.
This strategic acquisition is expected to enhance Cleveland-Cliffs' position in the North American steel market. The company will disclose the financial statements of Stelco and pro forma financial information within 71 calendar days following this announcement, as required by the SEC.
In other recent news, Cleveland-Cliffs has successfully completed the acquisition of Stelco Holdings, making it the largest flat-rolled steel producer in North America. The acquisition is expected to diversify Cleveland-Cliffs' customer base and reduce costs, aligning with the company's focus on the automotive sector and integrated steelmaking. Additionally, the company issued $1.8 billion in senior notes to partially finance the acquisition. These notes, which are unregistered and sold privately, are due on May 1, 2025, and will mature on November 1, 2029, and May 1, 2033.
In terms of financial performance, Cleveland-Cliffs reported an adjusted EBITDA of $323 million for the second quarter of 2024 and has undertaken significant net debt reduction. Analyst notes reveal that Citi has maintained a Neutral rating for Cleveland-Cliffs, while Seaport Global Securities has upgraded the company's stock rating to Buy.
In other recent developments, Cleveland-Cliffs is negotiating with the Department of Energy for potential funding to revamp its Middletown Works facility in Ohio, aimed at reducing carbon emissions and production costs. These are the recent developments for Cleveland-Cliffs, providing investors with a snapshot of its strategic moves and financial performance.
InvestingPro Insights
As Cleveland-Cliffs Inc. (NYSE:CLF) completes its acquisition of Stelco Holdings Inc., investors may find additional context from recent financial data and expert insights. According to InvestingPro, CLF's market capitalization stands at $6.17 billion, with a revenue of $21.01 billion over the last twelve months as of Q2 2024. Despite this substantial revenue, the company's gross profit margin is notably low at 5.21%, which aligns with an InvestingPro Tip indicating that CLF "suffers from weak gross profit margins."
The acquisition comes at a time when CLF's stock has experienced significant volatility, with a year-to-date price total return of -36.43%. This volatility is reflected in another InvestingPro Tip, which notes that "stock price movements are quite volatile." However, management's aggressive share buybacks, as highlighted by InvestingPro, could be seen as a vote of confidence in the company's future prospects following this strategic acquisition.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Cleveland-Cliffs, providing deeper insights into the company's financial health and market position as it integrates Stelco into its operations.
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