Worthington Steel Acquires Kloeckner, Shares Surge

Worthington Steel Announces Transformative Acquisition of Kloeckner & Co

Worthington Steel revealed its plan to acquire Kloeckner & Co in an all-cash transaction valued at an enterprise level of $2.4 billion. This strategic move is set to create the second-largest steel service center company in North America, leading to a significant surge in Worthington Steel's stock price.

Transaction Overview

The deal values Kloeckner & Co at €11 per share. The acquisition represents an enterprise value to EBITDA multiple of approximately 8.5x, or 5.5x when including expected synergies. Worthington Steel anticipates generating around $150 million in annual run-rate synergies by the end of its fiscal year 2028, primarily from North American operations.

The combination is projected to be substantially accretive to earnings per share within the first full year after closing. It will expand Worthington’s portfolio, end markets, and geographic presence across North America and Europe.

Financial and Market Impact

Following the announcement, Worthington Steel's stock rose by as much as 9 percent before settling at a 4.6 percent gain. The combined entity is expected to have over $9.5 billion in revenue. The acquisition will be financed through a mix of cash on hand and new debt, with pro forma net leverage projected to be around 4.0x at closing. The company has a stated goal to reduce this leverage to below 2.5x within two years post-transaction.

Forward Outlook

The transaction is supported by Kloeckner’s largest shareholder, SWOCTEM GmbH, which holds a 42 percent stake. The deal is contingent upon a minimum acceptance threshold of 65 percent of Kloeckner’s share capital and necessary regulatory approvals. Completion is anticipated in the second half of the 2026 calendar year, marking a significant growth step for Worthington Steel.

FAQ

Q: What is the value of the Worthington Steel and Kloeckner & Co deal?
A: The all-cash transaction has an enterprise value of $2.4 billion, valuing Kloeckner & Co at €11 per share.

Q: What is the expected timeline for the acquisition's completion?
A: The deal is expected to be completed in the second half of the calendar year 2026, pending shareholder acceptance and regulatory approvals.

Q: How will this acquisition impact Worthington Steel's market position?
A: It will create the second-largest steel service center in North America and significantly expand the company's scale and geographic footprint.

Source: Investing.com