Stelco (STLC) M&A announcement summary

Deal rationale and strategic fit

• Acquisition of Stelco for CAD 70 per share (CAD 60 cash, CAD 10 stock), total enterprise value $2.5B, at 4.8x trailing EBITDA, strengthens North American steel leadership and cost position.

• Offers immediate value and liquidity to shareholders, with an 87% premium to the last closing price and 37% to the 52-week high.

• Expands Canadian footprint, diversifies customer base, and bolsters presence in the Great Lakes region.

• Retains Stelco's name, legacy, Canadian management, and guarantees no layoffs to preserve local identity and national interests.

• Shareholders can participate in future growth via partial consideration in acquirer's stock.

Financial terms and conditions

• Purchase price is CAD 70 per share (CAD 60 cash, CAD 10 stock), total enterprise value $2.5B (approx. CAD 3.4B), at 4.8x LTM Adjusted EBITDA.

• Funded with 86% cash and 14% stock, keeping leverage below 2.5x EBITDA.

• Committed financing from Wells Fargo and JP Morgan; permanent financing to include unsecured notes, term loan, and small ABL draw.

• Transaction includes a C$100 million termination fee and a C$131 million reverse termination fee.

• No financing contingency; nearly 50% of shares are under voting support agreements.

Synergies and expected cost savings

• Estimated $120M annual cost savings (5% of target revenue), mainly from asset/CapEx optimization, procurement, and SG&A, expected within 12 months post-close.

• Synergies from operational optimization, procurement savings, and increased throughput at low-cost facilities.

• Breakdown: CAD 55M from asset/CapEx, CAD 35M procurement, CAD 20M SG&A, CAD 10M public company costs.

• Additional benefits from coke plant excess capacity and HBI integration to reduce costs and emissions.

• No impact to union jobs; synergy estimate aligns with precedent steel M&A transactions.