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Worthington Steel (WS) is trading higher after announcing last night that it will acquire Kloeckner & Co, a leading steel service center and metal processor with locations across North America and Europe. The deal advances WS's growth strategy by meaningfully expanding its scale and capabilities and strengthening its position in the North American metal processing sector.

• WS plans to implement the deal via a voluntary public tender offer through a dedicated acquisition subsidiary, offering €11 in cash for each Kloeckner share tendered, implying an enterprise value of $2.4 bln, and expects to finance it with a combination of cash on hand and new debt.
• Strategically, the combination broadens WS's metal processing footprint and capabilities, adding scale and a wider geographic reach that should deepen customer coverage and diversify end-market exposure.
• Management noted a particularly meaningful expansion in the southern U.S. where manufacturing activity and reshoring trends have been shifting demand.
• WS has identified $150 mln of annual synergy opportunities, largely operational and commercial in nature, primarily in North America, with a full run-rate targeted by FY28. Management said roughly half should be achievable in year one.
• Perhaps most notably, WS expects the deal to triple its sales scale to about $9.5 bln of combined revenue and be substantially accretive to EPS within the first full year of operations. On a trailing 12-month basis, Kloeckner shipped 4.2 mln tons, which generated sales of $6.3 bln. The merger is expected to be completed in the second half of CY26.

Briefing.com Analyst Insight

WS's acquisition of Kloeckner meaningfully expands its product portfolio beyond carbon flat-rolled steel, adding deeper processing and fabrication capabilities along with adjacent categories like aluminum, stainless, long products and plate. It also broadens WS's geographic reach, particularly in the southern U.S. and Mexico. The added footprint also diversifies end-market exposure, which should help smooth results across different demand environments. Investors will still weigh integration and leverage, but WS stressed it has a clear plan to reduce net leverage, with deleveraging supported by cash flow generation and synergy realization. Overall, the stock's positive reaction suggests the market is leaning toward management's view that this is a disciplined, accretive path to a more resilient earnings profile through the cycle.