Worthington Steel Bets Big with $2.4B Bid for German Rival Klöckner & Co.
The deal would create a transatlantic steel powerhouse but will saddle the recently spun-off Ohio company with significant debt, testing investor confidence.
Worthington Steel Inc. (NYSE: WS), a recently spun-off processor based in Ohio, has launched an ambitious multi-billion dollar takeover bid for its German competitor, Klöckner & Co SE, in a move that would dramatically reshape its scale and global footprint.
The American company announced its intention to offer €11.00 in cash for each share of the German steel distributor, valuing the deal at a total enterprise value of approximately $2.4 billion. The offer represents a significant 81% premium over Klöckner's undisturbed share price from December 5, 2025, when deal talks were first disclosed.
Investors reacted to the sheer ambition of the deal, with Worthington's shares trading up 3.6% to $38.75 in the session following the news. However, the bold strategic play is shadowed by the substantial financial risks it introduces.
Strategic Expansion vs. High Leverage
The strategic rationale for the acquisition is clear: scale. The combination would create the second-largest steel service center in North America by revenue. Worthington projects the deal will triple its annual sales to roughly $9.5 billion and generate an estimated $150 million in annual run-rate synergies by fiscal 2028. This move provides Worthington, which just began trading as an independent public company in December 2023, with immediate, massive expansion and diversification into the European market.
However, this growth comes at a steep price. The transaction will be funded through a combination of cash on hand and significant new debt. Upon closing, Worthington's pro forma net leverage is expected to jump to approximately 4.0x its earnings before interest, taxes, depreciation, and amortization (EBITDA).
That level of debt is raising eyebrows among analysts and investors. While Worthington's management has articulated a clear goal of deleveraging to below 2.5x within 24 months of the deal's closing, the high initial leverage introduces considerable risk in the notoriously cyclical steel industry. An unexpected market downturn could pressure the combined company's ability to service its debt and invest in the business.
The Path Forward
The deal has received strong initial support. Klöckner & Co's Management and Supervisory Boards have stated their intention to recommend the offer to shareholders. Critically, Klöckner's largest shareholder, SWOCTEM GmbH, which holds about 41.5% of the company, has already entered an irrevocable agreement to tender its shares, according to a company press release.
"This combination creates a premier, diversified metals processor with an immediate, significant presence in the European market," said Andy Rose, CEO of Worthington Steel, in a statement. He emphasized the deal's potential for value creation and the company's commitment to aggressive deleveraging post-closing.
The takeover is contingent on several conditions, including merger control and regulatory clearances in multiple jurisdictions and achieving a minimum acceptance threshold of 65% of all outstanding Klöckner shares. Both companies expect the transaction to be finalized in the second half of 2026.
For Worthington Steel, a company with a market capitalization of around $1.9 billion, the acquisition of a rival for $2.4 billion is a transformative—and risky—wager. The market will be watching closely to see if the strategic rewards of scale and synergy can outweigh the financial burden of the debt required to achieve them.