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, offering an 87% premium to the last closing price and 37% to the 52-week high.

• Strengthens leadership in integrated steel production, expands North American and Canadian footprint, and diversifies customer base across service centers, construction, automotive, and industrial end markets.

• Maintains Canadian national interests with guarantees of no layoffs, preservation of Stelco's name, legacy, and management, and continued investment in Canada.

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

• Bolsters presence in the Great Lakes region, increasing operational scale and market reach.

Financial terms and conditions

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

• Funded with 86% cash and 14% stock, keeping leverage below 2.5x EBITDA; no financing contingency.

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

• Shareholders of the acquirer and target will own approximately 95% and 5% of the combined company, respectively.

• Transaction includes a C$100M termination fee, C$131M reverse termination fee, and nearly 50% of shares under voting support agreements.

Synergies and expected cost savings

• Estimated CAD 120M in annual cost savings (5% of target revenue), with CAD 55M from asset and CapEx optimization, CAD 35M from procurement, CAD 20M from SG&A, and CAD 10M from public company costs.

• Synergies to be realized largely in year one post-close, with immediate savings from public company costs and phased procurement benefits.

• Additional benefits from coke plant excess capacity, HBI integration, and favorable exchange rates.

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

• Shareholders benefit from potential synergies through partial ownership in the acquirer.