Cleveland-Cliffs Inc. (NYSE:CLF) entered into a definitive agreement to acquire Stelco Holdings Inc. (TSX:STLC) from Fairfax Financial Holdings Limited (TSX:FFH), Alan Kestenbaum, an affiliate of Lindsay Goldberg and others for CAD 3.9 billion on July 15, 2024. Under the terms of the agreement, Stelco shareholders will receive CAD 60.00 per Stelco common share in cash and 0.454 shares of Cliffs common stock per share of Stelco common stock (or CAD 10.00 per share as of July 12, 2024), representing a total consideration of CAD 70.00 per Stelco share. The transaction implies a total enterprise value of approximately $2.5 billion (CAD 3.4 billion) for Stelco and represents an acquisition multiple of 4.8x 3/31/24 LTM Adjusted EBITDA with synergies. The acquisition is expected to be immediately accretive to 2024 and 2025 EPS. The transaction implies pro forma net leverage of 2.4x 3/31/2024 LTM Adjusted EBITDA. Upon completion of the transaction, Cliffs shareholders will own approximately 95% and Stelco shareholders will own approximately 5% of the combined company, on a fully diluted basis. Upon closing of the transaction, Stelco is expected to continue operations as a wholly-owned subsidiary, preserving the name and legacy of the business. Stelco?s headquarters will remain in Hamilton and the name and legacy of Stelco will be preserved in Hamilton, Nanticoke, and Canada. Cliffs will continue Stelco?s partnership with the Hamilton Tiger-Cats and Forge FC and will maintain its 40% equity interest and the master lease of Tim Hortons Field. The Stelco Board formed a special committee of directors which, following review and consideration of the transaction, unanimously recommended the Stelco Board approve the transaction. The Arrangement Agreement includes customary non-solicitation provisions, which are subject to customary "fiduciary out" provisions that entitle the Company to terminate the Arrangement Agreement and accept a superior proposal, subject to a customary right to match in favour of Cliffs and payment of a termination fee of CAD 100 million by the Company to Cliffs. A reverse termination fee of CAD 131 million would be payable by Cliffs to Stelco if the Transaction is not completed in certain circumstances.

The transaction is subject to approval by Stelco shareholders, receipt of regulatory approvals and satisfaction of other customary closing conditions. In addition to shareholder and court approvals, the Transaction is also subject to the receipt of applicable regulatory approvals, including approval under the Investment Canada Act, the Competition Act (Canada), expiration or termination of the waiting period under the U.S. Hart-ScottRodino Antitrust Improvements Act, approval of the listing on the NYSE of the shares of Cliffs common stock to be issued to Stelco shareholders, and approval under Stelco?s funding agreement with Canada?s Strategic Innovation Fund, as well as satisfaction of certain other closing conditions customary in transactions of this nature. The Transaction is not subject to a financing condition or approval by Cliffs shareholders. The transaction has been unanimously approved by Cliffs? and Stelco?s respective Boards. The transaction has received full support from David McCall, International President of the USW union. The transaction is expected to close in the fourth quarter of 2024. Wells Fargo, J.P. Morgan and Moelis & Company LLC are acting as financial advisors to Cliffs. Davis Polk & Wardwell LLP and Blake, Cassels & Graydon LLP are serving as legal counsel to Cliffs. In addition, Wells Fargo Bank, N.A. and J.P. Morgan have provided full underwritten financing commitments and are backstopping Cliffs? existing ABL Facility. BMO Capital Markets is acting as financial advisor to Stelco, and McCarthy Tétrault LLP and A&O Shearman LLP are serving as legal counsel to Stelco. In addition, RBC Capital Markets is acting as financial advisor and Stikeman Elliott LLP as legal counsel to the Special Committee of Stelco?s Board of Directors. Each of BMO Capital Markets and RBC Capital Markets has provided a fairness opinion to the Stelco Board.