May. 2026- As an example of a fairly recent trend in which large, publicly held service center networks are merging, there is Worthington Steel Inc. of Columbus, Ohio, and Klöckner & Co. SE of Düsseldorf, Germany. The two announced the deal in mid-January.
Worthington Steel GmbH, a wholly owned indirect subsidiary of Worthington Steel Inc., secured a total of 58.647.934 Klöckner & Co. shares following the end of the initial acceptance period, March 26. The 57.5 percent minimum acceptance threshold was met and exceeded. The offer for Klöckner & Co. was €11.00 per share, or a value of roughly U.S. $2.4 billion.
“We are pleased with our shareholders’ clear commitment to this combination, which paves the way for a new chapter in our company’s history,” Guido Kerkhoff, CEO of Klöckner & Co. SE, said in a statement March 31.
“Worthington Steel shares our strategic vision and is committed to the long-term development of our company. By leveraging the complementary strengths of both companies, we are building a foundation for sustainable growth and are determined to expand our higher- value products and services business across Europe and North America,” he said.
INVESTMENTS
During Klöckner’s fourth-quarter earnings call March 11, Kerkhoff noted that the company “continues to expand our production and processing footprint across North America with targeted investments that strengthen our higher value-added and service center business.” For example, “we’re constructing a new aluminum flat-rolled processing facility in Columbus, Mississippi, directly located at Aluminum Dynamics’ new production site. Building completion is planned for late fourth quarter 2026 with equipment start-up expected in second-quarter 2027.”
Klöckner & Co. SE is prepared to embark on a new pathway following its merger with Worthington Steel.
By adding an aluminum processing facility, said Kerkhoff, “we can make the most of [our] National Materials of Mexico acquisition and accelerate our automotive growth in North America.”
Speaking during Worthington Steel’s March 26 earnings call with investors, President and CEO Geoff Gilmore said the merger will create a larger, more diversified metals processing platform “with meaningful opportunities to generate value and capture synergies through Worthington’s proprietary base business improvement program that we call the Transformation.”
In preparation for closing, said Gilmore, “we have begun internal planning focused on integration, governance and Day 1 readiness. We’re doing that responsibly and deliberately with an eye toward maintaining our high-performing cultures, unlocking value and accelerating growth.”
Gilmore said he has spent time with several of Klöckner’s people, which “reinforced our view that Worthington and Klöckner are culturally aligned and fit together very well.”
He noted that the response from customers, suppliers and investors regarding the merger “has been overwhelmingly positive.”
During the earnings call, Worthington Steel’s executive team was asked about the debt the company took on to finance the transaction.
Timothy A. Adams, Worthington’s vice president and chief financial officer, said that the team “had a look at the regulations of antitrust as far as how much we could buy. And we could buy in the open market, 10 percent [of outstanding shares]. We used that opportunity when the tender offer was announced to buy in the open market. So we increased our asset-based loan by $126 million, and we used $101 million of it to buy shares in the open market.”
As long as the share price stays below the tender offer of €11, Worthington is able to acquire shares. As the price of Klöckner shares rose above that price, “that shut us out of the market,” Adams said. “So we bought shares early in the [first] quarter, and we haven’t bought much since.”
The merger will create a larger, more diversified metals processing platform that captures synergies through Worthington’s proprietary business improvement program.
RISKS AND UNCERTAINTIES
Asked about Germany’s economic activity, Gilmore said the Worthington Steel team “went into this acquisition eyes wide open and a clear understanding on Europe and the current challenges.”
Germany is working to protect its domestic industries from Chinese imports, he said. In addition, “they have increased spend on defense pretty significantly here over the last six to 12 months, which should benefit the business environment, specifically manufacturing.
“But what we did not predict was a war with Iran and the impact on the oil prices,” Gilmore said. “Right now, it’s not having a major impact on the business here [or in] Europe. But if this is prolonged, yes, then we certainly are concerned about the German economy, and we’re equally concerned about the economy here.”
Higher energy prices won’t “be good for either economy. Overall, the merger positions the Worthington Steel to accelerate its growth,” according to Gilmore.
FORECAST
Both companies provided 2026 market outlooks during their quarterly earnings calls. “We are firmly optimistic when it comes to both steel demand and market price fundamentals in 2026,” John Ganem, CEO of Americas for Klöckner & Co., said. “Market cycles are setting up somewhat more favorably than the past two years. A positive outcome on the USMCA review would provide some much-needed clarity and further upside potential for North American steel demand,” said Ganem, referring the United States-Mexico-Canada Agreement on trade.
“Conditions appear to be moving toward a more robust automotive market later in the year,” Worthington’s Gilmore said. As for agricultural machinery, “we are nearing the market cycle trough; a slow rebound will begin later in 2026.” In construction, “conditions are flat in most segments. We expect to see data center growth continue and, as lower interest rates take hold, we’ll see some expansion in the second half due to pent-up demand,” he said, adding that some recovery in order rates for Class 8 trucks and trailers is expected.
In the wake of sizable mergers such as Olympic Steel and Ryerson Inc., and Worthington Steel and Klöckner & Co., market needs and available financing will determine whether we will witness more of these transactions during the remainder of 2026.
