12:00 PM EDT, 07/15/2024 (MT Newswires) -- Cleveland-Cliffs (CLF) on Monday said it agreed to acquire Stelco Holdings ( STZHF ) in a cash-and-stock deal valued at about US$2.5 billion, sending the Canadian steelmaker's shares up 73%.

Stelco ( STZHF ) shareholders will receive $60 per share in cash and 0.454 of a Cliffs share, representing a total consideration of $70 per Stelco ( STZHF ) share, an 87% premium to the company's Friday closing price on the Toronto Stock Exchange.

Cliffs expects to achieve about $120 million of estimated annual cost savings with no impact to union jobs. The acquisition is expected to be immediately accretive to 2024 and 2025 earnings per share.

The deal also brings an additional 1,800 United Steelworkers (USW) union employees into Cliffs' workforce. The transaction has the support of David McCall, international president of the USW union.

At deal closing, expected in the fourth quarter, Cliffs shareholders will own about 95% and Stelco ( STZHF ) shareholders will own about 5% of the combined company. Stelco ( STZHF ) is expected to continue operations as a wholly-owned subsidiary.

Stelco ( STZHF ) is an integrated steelmaker with two operational sites in Ontario, Lake Erie Works and Hamilton Works. The acquisition expands Cliffs' steelmaking footprint and doubles its exposure to the flat-rolled spot market.

The transaction has been unanimously approved by Cliffs' and Stelco's ( STZHF ) respective boards.

Stelco ( STZHF ) shares at last look surged $27.43 to $64.79 on the Toronto Stock Exchange.

Price: 64.82, Change: +27.46, Percent Change: +73.50