Worthington Steel (NYSE:WS) M&A announcement Transcript

Summary of Worthington Steel Investor Call on M&A Announcement Company and Industry - Company: Worthington Steel (NYSE: WS) - Acquisition Target: Klöckner, a company listed on the Frankfurt Stock Exchange Core Points and Arguments 1. Strategic Acquisition: Worthington Steel is acquiring Klöckner to strengthen its position in high-value metals processing, enhance shareholder value, and create new opportunities for employees [3][4] 2. Market Position: Post-acquisition, Worthington Steel expects to become the second largest service center in North America, expanding its geographic reach and product offerings [4][12] 3. Synergies and Growth Initiatives: The acquisition is anticipated to generate approximately $150 million in annual run-rate synergies by the end of 2028, with about 50% expected to be realized in the first year [15][17] 4. Financial Structure: The transaction is an all-cash acquisition valued at approximately $2.4 billion, with an expected EBITDA margin of 7% and combined sales of $9.5 billion [15][16] 5. Cultural Alignment: Both companies share a focus on safety, operational excellence, and innovation, which is expected to facilitate a smooth integration process [3][5] 6. Diversification: The acquisition will broaden Worthington's product portfolio to include aluminum, stainless steel, long products, and downstream fabrication, enhancing resilience against market cyclicality [10][12] 7. Geographic Expansion: Klöckner's operations will enhance Worthington's presence, particularly in the southern U.S., where demand is growing due to manufacturing activity and reshoring trends [9][12] 8. Operational Efficiency: The integration is expected to improve operational efficiency through procurement savings, logistics optimization, and reduced administrative costs [18][20] Additional Important Content 1. Shareholder Support: Klöckner's largest shareholder, Swactim, has agreed to tender their shares in support of the acquisition [8] 2. Market Dynamics: The acquisition is seen as timely due to favorable market conditions for consolidation in the steel industry [53] 3. Long-term Goals: Worthington aims to achieve over 10% group EBITDA margins, which the acquisition is expected to accelerate [45][46] 4. Integration Management: A dedicated integration management office will oversee the synergy capture process, ensuring accountability and clear goals [26][60] 5. European Market Exposure: Approximately 20% of the combined company's revenue is expected to come from Europe, with a focus on North America for synergy realization [30][39] This summary encapsulates the key points discussed during the investor call regarding Worthington Steel's acquisition of Klöckner, highlighting the strategic rationale, expected synergies, and operational benefits of the transaction.