Worthington Steel Inc. (WS) just made its biggest move yet, announcing Thursday it will acquire German steel giant Kloeckner & Co in a $2.4 billion deal that reshapes the North American steel landscape.
The Ohio-based steel processor is offering 11 euros per share (about $12.80) for all outstanding Kloeckner shares through a voluntary public offer. Here's what makes this interesting: Kloeckner's management is on board, existing leadership stays in place, and the company's largest shareholder—SWOCTEM GmbH, which owns 42% of the company—has already committed to tendering its shares. That's a pretty strong vote of confidence.
The deal still needs at least 65% shareholder acceptance and regulatory approval, with closing expected in the second half of 2026. But with the biggest shareholder already locked in, getting to 65% seems like a reasonable bet.
The Numbers Behind the Deal
At $2.4 billion in enterprise value, Worthington Steel is paying roughly 8.5 times Kloeckner's trailing EBITDA as of September 30, 2025. That multiple drops to about 5.5 times when you factor in the $150 million in annual synergies the company expects to capture. For a transformational acquisition that creates the second-largest steel service center in North America, that's not a crazy price.
Worthington plans to fund the acquisition with cash on hand and new debt, fully backed by underwritten commitments with no financing conditions. Translation: the money is ready to go. At closing, pro forma net leverage will sit around 4.0x including those synergies, which is high but manageable. The company's stated priority is deleveraging, targeting a drop below 2.5x within 24 months of closing.
What You're Actually Getting
Kloeckner brings a diverse product portfolio spanning carbon flat-roll steel, electrical steel, aluminum, stainless steel, and long products. The combined company will generate over $9.5 billion in revenue and expand Worthington's footprint across both North America and Europe.
Beyond the obvious scale benefits, this is about complementary capabilities. Worthington gets enhanced positioning in key products and regions, a broader product range, access to new end markets, and meaningful geographic diversification into Europe. The companies share similar operational philosophies around excellence and disciplined execution, which should help integration go smoother than your average mega-merger.
Those $150 million in annual run-rate synergies are expected to significantly boost earnings per share in the first full year after closing. Most of the commercial synergies will come from North America, with full realization targeted by the end of fiscal 2028.
What Management Is Saying
Worthington Steel President and CEO Geoff Gilmore framed the deal as a value creation story across the board: "Through the acquisition of Kloeckner & Co., we will enhance our offerings in high-value metals processing and create meaningful value for our shareholders, deeper relationships with our customers and suppliers, and growth opportunities for our employees."
He continued: "Worthington Steel and Kloeckner share a focus on operational excellence, innovation and disciplined execution. By integrating Kloeckner's capabilities in North America and Europe, we will be stronger together, building a more resilient business and driving shareholder value."
As of November 30, 2025, Worthington Steel had $182.1 million in debt and $89.8 million in cash and cash equivalents, so it's starting from a relatively clean balance sheet before taking on the acquisition debt.
Investors seem to like what they're seeing. Worthington Steel shares climbed 1.29% to $39.25 in Friday's premarket trading, hitting a fresh 52-week high in the process.
