Steel distribution groups Klöckner & Co and Worthington Steel announced on Thursday a business combination agreement, following the completion of due diligence and related negotiations.
As part of the transaction, US company Worthington Steel intends to launch a voluntary public takeover offer for all outstanding shares of the German-based group.
Under the terms of the agreement, Worthington is offering €11.00 ($12.78) in cash for each Klöckner share. This corresponds to a premium of 81% on the closing price of Klöckner on 5 December, the date prior to which negotiations were publicly disclosed. The implied total enterprise value of the transaction is approximately €2.1 billion ($2.4 billion), Kallanish learns from a Klöckner statement.
Both Klöckner’s management board and supervisory board welcome the offer and intend to recommend its acceptance to shareholders. In their view, it reflects the intrinsic value of the group’s shares and includes an attractive premium.
According to the statement, Klöckner’s largest stakeholder, SWOCTEM GmbH/Friedhelm Loh group, has committed to tender all of its 41.53% stake. Members of Klöckner’s management board have also confirmed they will tender all shares they hold into the offer.
Klöckner & Co has over recent years gradually increased its activities in the USA under Kloeckner Metals. This set-up “complements our own capabilities in an ideal way,” says Geoff G. Gilmore, chief executive of Worthington Steel. “Together, we are poised to sustainably enhance our offerings and accelerate our growth strategy.”
Under the agreement, Klöckner will continue to operate independently and be run by the current management, with its European headquarters remaining in Düsseldorf. There are no intended layoffs or site closures, and all works council agreements will remain in force, it notes.
