Worthington Steel’s Kloeckner takeover two years in the making
“We had been looking at this deal for two years and Kloeckner was always number one on the list [of potential acquisition targets],” Worthington Steel president and CEO Geoff Gilmore said on Friday.
News of Worthington Steel’s takeover attempt of the German metals processor and distributor broke in early December 2025, ringing out a year of intense mergers and acquisitions (M&A) in the overall steel industry.
On the evening of Thursday January 15, news emerged that Worthington Steel was successful in its takeover attempt, entering a business combination agreement with Kloeckner & Co to create the second-largest steel service center company in North America, with more than $9.5 billion of combined revenue.
The combination of Worthington Steel and Kloeckner & Co has created a distribution giant in North America, taking the spot previously occupied by the merger of value-added processor and distributor Ryerson Holding and metals service center Olympic Steel, which created a $6.5 billion service center behemoth.
Gilmore said he had expressed his congratulations to the CEOs of Ryerson and Olympic when their mega merger was announced and said he was happy to let them have the spot of the second-largest North American steel service center for just two months.
“They cannot claim to be the second largest any more; now we are the second-largest [steel service center] company [in North America] and they are a distant third,” Gilmore said.
Despite being a German company, about 75% of Kloeckner & Co’s shipments are in North America, making it an attractive acquisition target, Gilmore said.
Kloeckner & Co, with approximately 110 locations across North America and Europe and product capabilities including carbon flat-roll steel (sheet and plate), electrical steel, aluminium, stainless steel and long products, was an attractive M&A target as it is a “highly complementary business” with “adjacent markets” to Worthington Steel’s operations, Gilmore told Fastmarkets.
Kloeckner & Co has “more end-market diversification” than Worthington Steel, Gilmore said, noting that the “significant synergies” of the “much bigger combined company” will make for seamless integration of the two companies.
Together, the combined company will have about 12,000 employees, Gilmore said.
The synergies could amount to approximately $150 million in anticipated annual cost, operational and commercial process synergies primarily in North America and about 95-99% of those synergies are in Kloeckner’s North America operations, Gilmore said.
Synergies are expected to be fully realized by the end of Worthington Steel’s fiscal year 2028 and the transaction is expected to triple Worthington Steel’s scale in terms of sales, representing approximately $9.5 billion of combined revenue while maintaining margins above 7%.
A subsidiary known as Worthington Steel GmbH has been established for the acquisition, which will launch a voluntary public offer to acquire all outstanding shares of Kloeckner & Co.
Kloeckner shareholders who choose to participate in the offer will receive €11 ($12.76) in cash for each share tendered into the offer.
The offer price implies an enterprise value of $2.4 billion.
Kloeckner’s US assets have drawn the attention of other North American market participants as well, as the German company sold eight distribution sites of its US subsidiary, Kloeckner Metals Corporation (KMC) in 2025.
Georgia-based KMC sold seven US-based service centers to Canadian processor and distributor Russel Metals for approximately $119 million in late September 2025 and sold an eighth US distribution site to Service Steel Warehouse.
USMCA review: “Imperative to get a strong intercontinental agreement”
It is unsurprising that M&A activity heated up last year, according to Gilmore, as it is only the “bigger businesses with stronger balance sheets” that can make the investments in technology and talent required to fortify a company against market shocks.
2025 was a year of dizzying M&A activity in both the steel supply and distribution side, driven by heightened trade uncertainty and beset by US President Donald Trump’s “America First” trade policy, which deployed steep metal tariffs and upended traditional supply chains.
The review of the US-Mexico-Canada Agreement (USMCA), scheduled for July 1, 2026, is of crucial importance to the future stability of a business like the one Gilmore is heading.
“It is imperative to get a strong intercontinental agreement in place,” Gilmore said, underlining Worthington Steel’s expansion of its Tempel Steel facility in Apodaca, Mexico, to capture a larger chunk of the growing North American laminated electrical steel market.
“There is not enough electrical steel capacity [in the US] and Worthington Steel would feel positive about investing more in Mexico,” Gilmore said, adding that for further investments to occur across borders, a definite answer to what a revamped USMCA would look like is required.
The uncertainty caused by the future of the USMCA is concerning for any steel sector CEO and has slowed down onshoring and nearshoring of steel supply chains, Gilmore said.
“Every end market has been subdued last year and interest rates would have gone down more if not for the [inflationary pressure] created by the trade tariffs,” Gilmore added.
Author: Rijuta Dey
Worthington’s play for Germany’s Kloeckner rings out a year of intense M&A in steel processing sector
The news of US-based steel processor Worthington Steel being in talks with Kloeckner for a “voluntary public takeover” broke in two successive press releases on Saturday December 6, a development termed “crazy” by a market watcher.
Both companies released statements on Saturday to confirm they were in negotiations, with the German metals firm noting that Worthington Steel is conducting a due diligence review with the aim of potentially launching a voluntary public takeover offer for its shares.
“It is currently uncertain whether, or under which conditions, a potential voluntary public takeover offer will be pursued,” Kloeckner said in its statement.
Worthington Steel said in its statement that no investment decision had been made, and that the talks might not result in a deal.
Fastmarkets reached out to Worthington Steel on Monday December 8 for additional details, and a company spokesperson responded that, “at this time, we are still in negotiations and we will not be making any additional comments beyond what we shared on Saturday.”
If successful, the takeover will not be Worthington Steel’s first foray into international investments, especially against the backdrop of the 50% tariff on steel imports that US President Donald Trump implemented in 2025.
Earlier this year, Worthington Steel completed the acquisition of a 52% stake in Italy-based Sitem Group, which makes electric motor laminations and related products for automotive and industrial applications across six facilities in Europe.
Worthington Steel has publicly stated its aim of investing in value-added and specialty steel products in niche markets due to the higher margins the segments provide.
Another example is Worthington Steel expanding its Tempel Steel facility in Apodaca, Mexico, to capture a larger chunk of the growing North American laminated electrical steel market.
Worthington Steel reported net sales of $872.9 million in the third quarter of 2025, an increase of 5% compared with $834 million in the previous year’s corresponding quarter, while quarterly earnings rose by 11.29% to $48.3 million.
Kloeckner is pursuing its own multiyear growth strategy, dubbed “Leveraging Strengths – Step up 2030,” and is focusing on higher value-added segments and its service center business.
As part of the plan, Kloeckner agreed to sell eight distribution sites of its US subsidiary, Kloeckner Metals Corporation (KMC).
Georgia-based KMC sold seven US-based seven service centers to Canadian processor and distributor Russel Metals for approximately $119 million, in a deal announced in late September this year.
KMC sold an eighth US distribution site to Service Steel Warehouse, according to Kloeckner’s financial report for the first nine months of 2025.
The Kloeckner Metals Americas segment generated earnings before interest, taxes, depreciation, and amortization (EBITDA) of €158 million ($183.87 million) in the first nine months of 2025, compared with €112 million in the prior-year period.
The positive trend in Kloeckner’s Americas division comes despite the negative impact of “increased economic uncertainty over the course of the year,” the German company said in its report.
Kloeckner & Co is also focused on expanding its capabilities in the defense and infrastructure sector in Germany to take advantage of increased defense spending across Europe, according to the report.
