Cleveland-Cliffs Inc. (NYSE: CLF) has taken a significant step forward in its planned acquisition of Stelco Holdings Inc. The company recently announced the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), marking a crucial milestone in the acquisition process.

Regulatory Approval

The expiration of the HSR Act waiting period effectively clears a major regulatory hurdle for Cleveland-Cliffs. This development signifies that the U.S. Department of Justice has not raised any antitrust concerns regarding the proposed acquisition. It’s a positive sign for the deal’s progression and brings Cleveland-Cliffs closer to finalizing the purchase of the Canadian steelmaker.

Timeline and Next Steps

With this regulatory clearance in hand, Cleveland-Cliffs is now eyeing the fourth quarter of 2024 for the completion of the acquisition. However, the deal’s closure remains subject to the satisfaction or waiver of other customary closing conditions and approvals.

Strategic Implications

Lourenco Goncalves, Cleveland-Cliffs’ Chairman, President, and CEO, expressed enthusiasm about this development, stating, “We are excited to secure this critical step in the process and move another step closer toward completing this transformative acquisition of Stelco”. He emphasized the strategic importance of the acquisition, noting that it will provide Cleveland-Cliffs with “more resilience and geographic diversification in a highly competitive global market”.

Deal Overview

The acquisition, initially announced in July 2024, values Stelco at approximately USD $2.5 billion (CAD $3.4 billion). Under the terms of the agreement, Stelco shareholders will receive a combination of cash and Cleveland-Cliffs stock, totaling CAD $70.00 per Stelco share.

Industry Impact

This acquisition is set to significantly expand Cleveland-Cliffs’ presence in the North American steel market. It will double the company’s exposure to the flat-rolled spot market and bring cost advantages in raw materials, energy, healthcare, and currency. The deal also adds approximately 2.6 million net tons of flat-rolled steel production capacity to Cleveland-Cliffs’ portfolio. As the steel industry continues to evolve, this acquisition positions Cleveland-Cliffs to strengthen its competitive stance and adapt to changing market dynamics. With regulatory approval now secured, all eyes will be on the final steps of this transformative deal in the coming months.