The steel trader Klöckner & Co is about to be taken over by the US group Worthington Steel. What investors should know.
The US group is offering eleven euros per share for the Düsseldorf company. Major shareholder Friedhelm Loh supports the bid and has committed to tendering the entire stake of 41.5 percent of the KlöCo shares, Worthington Steel announced late on Thursday evening in Columbus and Düsseldorf. The company value including debts of the SDAX-listed group is estimated at 2.4 billion US dollars (almost 2.1 billion euros) in the transaction.
This is how the stock reacts
Worthington Steel’s takeover offer sent shares of Klöckner & Co soaring on Friday. The US group is offering 11 euros per share for the Düsseldorf steel trader. The shares then ultimately rose via XETRA by 28.22 percent to 11.04 euros. The company value of Klöckner & Co in the transaction is estimated at 2.4 billion dollars or the equivalent of almost 2.1 billion euros.
Takeover negotiations between the two companies became known last December. Driven by this, the shares jumped over their downward trend and had already increased by almost 50 percent by the previous day. Since the beginning of the year, shares in the small-cap SDAX index have increased by more than a third, and in the past twelve months they have even increased by around 145 percent.
Major shareholder Friedhelm Loh, who holds 41.5 percent of Klöckner shares through Swoctem GmbH, supports the takeover offer. Worthington Steel wants at least 65 percent of the shares in Klöckner & Co and expects the transaction to be completed in the second half of the year. Klöckner will remain independent after the merger. Worthington wants to be represented on the supervisory board as a “strategic partner”.
Analyst Christian Cohrs from Warburg Research considers the takeover offer to be attractive. The price offered by Worthington Steel is almost twice as high as the steel dealer’s independent fair value of 6.15 euros. The offer enables investors to realize the true value of the company in a challenging European market environment and thereby avoid the risks that the steel trader faces.
DZ Bank expert Dirk Schlamp believes the probability of success of the transaction is high given the comparatively low minimum acceptance threshold and the support of the board of directors and major shareholder Loh. In addition, he does not expect any significant hurdles in the context of regulatory approvals. Although an improvement in the offer seems unlikely, it is clearly positive.
LBBW analyst Jens Münstermann would also not bet on a higher takeover offer and recommends that shareholders take advantage of the recent price jump and sell the shares. Anyone who only wants to tender the shares after the dividend has been paid out in May runs the risk that the takeover may fail.
Thomas Schulte-Vorwick from Bankhaus Metzler also considers the takeover to be strategically sensible because of the high potential for operational savings. The analyst also praises the sale of the Becker Group, which Klöckner announced separately. The multi-metals platform in the flat steel sector only offers weak profitability, but the remaining portfolio is likely to offer more attractive growth opportunities.
Worthington Steel holds on to Klöckner’s lead
The US steel group Worthington Steel wants to focus on continuity even after the planned takeover of the German steel trader Klöckner & Co: The existing management should be retained and play a central role in the integration, explained Worthington CEO Geoff Gilmore in an interview with the “Handelsblatt”. Klöckner boss Guido Kerkhoff should continue to work closely with Worthington and support operational processes.
Worthington aims to fully integrate the two companies, Gilmore said. In Europe, leadership should remain largely autonomous. The European portfolio is solidly positioned and the strategy is convincing. “We will trust the leadership team and give them space to implement their strategy.” No locations are to be closed, and there are currently no plans to relocate production sites to the USA.
According to him, the strategic orientation is aimed at growth and higher added value. A focus is on electrical steel, which is needed for transformers in data centers. In recent years, Klöckner has focused its business more closely on high-margin products and thus fits Worthington’s strategy. The integration will take several years, Gilmore said. He expects around three years to implement synergies and adapt the organization step by step. It is crucial that the pace is supported by employees and management.
With a view to the industry, the CEO expects further major consolidations, especially in North America. The markets are fragmented and larger platforms will increasingly play a dominant role in the coming years. “The market will continue to consolidate in North America. This remains to be seen in Europe,” said Gilmore.
dpa AFX
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