Cleveland-Cliffs Inc. chief executive officer Lourenco Goncalves signalled he is confident of obtaining Canadian government approval to buy Canadian steel maker Stelco Holdings Inc.The Cleveland-based steel giant announced its intentions on Monday to buy Hamilton-based Stelco. Cleveland-Cliffs is offering $60 a share and 0.454 of its stock for each Stelco share. The buyout is worth $70 a share, an 89-per-cent premium on Stelco’s $36.
He said he expects the transaction to be approved quickly, and added that calls about the deal with Canadian federal and provincial officials, which started on Sunday and will continue this week, have gone well. While high purity iron used in steel making is a critical mineral, steel itself is not classified as such in Canada.
While Ottawa recently approved Glencore’s US$6.9-billion acquisition of the steel-making coal business of Teck, that was only after it imposed a long list of legally binding conditions, some of which are in place for more than 25 years. Those conditions include long-term guarantees regarding jobs, retaining a Canadian head office for a decade, and maintaining two-thirds representation of Canadians in executive and senior management jobs.
Stelco’s three biggest shareholders, representing about 45 per cent of its shares, including Fairfax Financial Holdings have agreed to vote for the deal.