8-K: Olympic Steel to Merge with Ryerson in All-Stock Deal

Olympic Steel, Inc. has entered into a definitive merger agreement with Ryerson Holding Corporation, where Olympic Steel shareholders will receive 1.7105 shares of Ryerson common stock for each of their shares.

Summary

• Olympic Steel, Inc. (the Company) will merge with Crimson MS Corp., a wholly-owned subsidiary of Ryerson Holding Corporation (Parent), with Olympic Steel continuing as the surviving, wholly-owned subsidiary of Ryerson.
• Each outstanding share of Olympic Steel common stock will be converted into the right to receive 1.7105 shares of Ryerson common stock, plus a cash payment for any fractional shares.
• The Boards of Directors of both Olympic Steel and Ryerson have unanimously approved the merger agreement and recommend its adoption by their respective shareholders.
• The merger is intended to qualify as a reorganization for U.S. federal income tax purposes.
• Outstanding time-based restricted stock units (RSUs) of Olympic Steel will be assumed by Ryerson and converted into Ryerson RSUs, maintaining original terms and conditions, including accelerated vesting if applicable.
• Performance stock units (PSUs) granted prior to the merger agreement date will be canceled and converted into a cash payment based on actual performance for 2023 and target levels for 2024 and 2025.
• PSUs granted after the merger agreement date will be assumed by Ryerson and converted into performance-based vesting restricted stock units of Ryerson.
• Restricted stock awards (RSAs) outstanding prior to the agreement date will vest immediately, while those granted after will vest on a prorated basis; vested RSAs will receive merger consideration, unvested ones will be forfeited.
• Phantom stock awards will be assumed by Ryerson, converted into phantom units of Ryerson common stock, with a prorated portion vesting and paid in cash within 30 days of closing.
• Time-based long-term cash incentive awards will be assumed by Ryerson, retaining original terms and conditions.
• Performance-based cash awards granted prior to the agreement date will be canceled and converted into a cash payment based on actual performance for 2023 and target levels for 2024 and 2025.
• Performance-based cash awards granted after the agreement date will be assumed by Ryerson and remain subject to original terms.
• Other long-term cash awards under the Company Stock Plan, including Metal-Fab Manager Long-Term Incentive Plan and Retention Incentive Plan awards, will be assumed by Ryerson, with a prorated portion vesting and paid in cash within 30 days of closing.

Sentiment

Score: 7

Explanation: The merger agreement indicates a strategic consolidation, which can be positive for long-term growth and market position, despite inherent integration risks. The all-stock nature and unanimous board approvals suggest confidence in the combined entity's future.

Positives

• The Boards of Directors of both Olympic Steel and Ryerson have unanimously approved the merger, indicating strong internal support.
• The transaction is structured as an all-stock merger, allowing Olympic Steel shareholders to participate in the future growth of the combined entity.
• The merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes, which is beneficial for shareholders.
• Key management personnel from Olympic Steel, including Richard Marabito, Andrew Greiff, Richard Manson, and Zachary Siegal, will assume significant roles within the combined Ryerson organization, ensuring continuity and leveraging expertise.
• The surviving corporation will maintain a presence in the Cleveland metropolitan area, which could be positive for local employment and community relations.
• The combined entity will benefit from the integration of business operations, potentially leading to synergies and efficiencies.

Negatives

• The consummation of the merger is subject to various conditions, including shareholder and regulatory approvals, which introduce uncertainty and potential for delays.
• There are risks associated with the integration of the two companies' operations, which could impact the realization of expected synergies.
• The public announcement of the merger could negatively impact relationships with customers, suppliers, distributors, partners, or employees due to uncertainty.
• Potential for litigation from shareholders of either company regarding the transactions, which could incur costs and divert management attention.
• The merger agreement includes termination fees of $15,000,000 for either party under specific circumstances, and up to $10,000,000 for expenses, representing potential financial liabilities if the deal fails.

Risks

• Levels of imported steel in the United States, imposed tariffs and duties on imported and exported steel or other products, and U.S. trade policy and its impact on the U.S. manufacturing industry, including retaliatory actions by other countries.
• General and global business, economic, financial, and political conditions, including the failure to obtain requisite shareholder approval and other closing conditions.
• Failure to obtain governmental approvals on proposed terms and timeline, and any conditions imposed on the combined company.
• Risk that cost savings and other synergies from the transactions may not be fully realized or may take longer than expected.
• Disruption from the proposed transactions making it more difficult to maintain relationships with customers, partners, employees, or suppliers.
• Risk that the proposed transactions may be less accretive than expected, or may be dilutive, and that the combined company may fail to realize the benefits expected from the merger.
• Risks relating to unforeseen liabilities of either company.
• Recessionary conditions and legislation, including the impact of the enactment of the One Big Beautiful Bill Act (OBBBA) on July 4, 2025.
• Shortages of skilled labor, increased labor costs, and the ability to attract and retain qualified personnel.
• Volatile metals prices and inventory devaluation.
• Risks associated with economic sanctions and current global conflicts, or additional war, military conflict, or hostilities adversely affecting global metals supply and pricing.
• Supplier consolidation or addition of new capacity.
• Reduced production schedules, layoffs, or work stoppages by either company, their suppliers, or customers.
• Ability to successfully integrate recent acquisitions and risks inherent in achieving expected results.
• Adequacy of existing information technology and business system software, including duplication and security processes.
• Inflation or deflation within the metals industry, product mix, and inventory levels impacting cost of materials sold due to LIFO inventory valuation fluctuations.
• Competitive factors such as availability and global pricing of metals, production levels, industry shipping and inventory levels, and rapid fluctuations in customer demand and metals pricing.
• Fluctuations in the value of the U.S. dollar and its impact on foreign steel pricing, U.S. exports, and foreign imports.
• Risks associated with infectious disease outbreaks, including customer closures, reduced sales, slower payments, increased uncollectible accounts, falling metals prices, negative liquidity impacts, and inability to access financing.
• Increased customer demand without corresponding increase in metal supply leading to inability to meet demand and lower sales/profits.
• Rising interest rates and their impacts on variable interest rate debt.
• Cyclicality and volatility within the metals industry.
• Customer, supplier, and competitor consolidation, bankruptcy, or insolvency.
• Timing and outcomes of inventory lower of cost or net realizable value adjustments and LIFO income or expense.
• Reduced availability and productivity of employees, increased operational risks from remote work, cybersecurity risks, and IT disruptions.
• Successes of efforts to improve working capital turnover, cash flows, and achieve cost savings.
• Risks and uncertainties associated with intangible assets, including impairment charges.
• Ability to generate free cash flow through operations and repay debt.
• Impacts of union organizing activities and success of union contract renewals.
• Amounts, successes, and ability to continue capital investments and strategic growth initiatives, including acquisitions and business information system implementations.
• Events or circumstances adversely impacting the successful operation of processing equipment and operations.
• Changes in laws or regulations or their interpretation/enforcement impacting financial performance and restricting business operations or strategies.
• Events or circumstances impairing or adversely impacting the carrying value of any assets.
• Ability to pay regular quarterly cash dividends and the amounts/timing of future dividends.
• Ability to repurchase shares of common stock and the amounts/timing of repurchases.
• Ability to sell shares of common stock under at-the-market equity program.
• Unanticipated developments with contingencies such as litigation, arbitration, and environmental matters.

Future Outlook

The parties intend for the merger to qualify as a tax-free reorganization for U.S. federal income tax purposes. Both companies will use reasonable best efforts to ensure this treatment and to integrate business operations post-closing. The combined entity aims to leverage the strengths of both companies, with key Olympic Steel executives taking on significant roles within Ryerson, and maintaining a presence in Cleveland. The merger is expected to close after shareholder and regulatory approvals, with an initial outside date of April 28, 2026, extendable to July 28, 2026, if regulatory conditions are pending.

Management Comments

• The Board of Directors of Olympic Steel unanimously approved and declared advisable the Merger Agreement and resolved to recommend its adoption by the Company Shareholders.
• The Board of Directors of Ryerson Holding Corporation also approved and declared advisable the Merger and the issuance of shares of Ryerson Common Stock in connection with the Merger, recommending that Ryerson stockholders approve the issuance.

Industry Context

This merger represents a significant consolidation within the metals distribution industry. Such transactions are often driven by a desire to achieve economies of scale, enhance market position, diversify product offerings, and improve operational efficiencies in a competitive and often cyclical sector. The all-stock nature of the deal suggests a strategic alignment and a belief in the long-term value creation of the combined entity, rather than a purely financial play.

Management Changes

Corporate Governance

Legal Proceedings

• The filing mentions potential litigation brought by stockholders of Parent or shareholders of the Company relating to the Transactions, including the Merger. Both parties agree to provide the other an opportunity to participate in the defense of such litigation and require mutual consent for settlement, with specific conditions for unilateral settlement (e.g., monetary damages not exceeding $500,000 individually or $2,000,000 in aggregate for the Company, or $1,000,000 individually or $5,000,000 in aggregate for Parent, no injunctive relief, release from liability, and no admission of wrongdoing).

Related Party Transactions

• Neither Olympic Steel nor Ryerson has engaged in any transactions or contracts with affiliates (other than their respective subsidiaries) that would be required to be reported under Item 404 of Regulation S-K since December 31, 2024, that have not been reported.

Stakeholder Impact

• **Shareholders (Olympic Steel):** Will receive 1.7105 shares of Ryerson common stock for each Olympic Steel share, becoming shareholders of the combined entity. This provides an opportunity to participate in the future performance of the larger company.
• **Shareholders (Ryerson):** Will experience dilution due to the issuance of new shares for the merger, but are expected to benefit from the strategic advantages and synergies of the combined entity.
• **Employees (Olympic Steel):** Continuing employees will receive comparable base salary/hourly wage and short-term cash incentive opportunities for at least one year post-closing. Long-term incentive opportunities will be substantially comparable. Service credit will be given for vesting, benefit accrual, and eligibility in Ryerson's plans. Key executives will assume significant roles within Ryerson.
• **Customers & Suppliers:** The public announcement of the merger could potentially impact existing relationships, though both companies are committed to preserving business organization and operating in the ordinary course.
• **Management:** Key Olympic Steel officers will transition to leadership roles within Ryerson, indicating a planned integration of management teams.
• **Regulatory Bodies:** The merger is subject to review and approval by various governmental entities, including antitrust authorities (HSR Act), which will assess potential market impacts.

Next Steps

• Parent and Company will jointly prepare and file a Registration Statement on Form S-4 with the SEC, which will include a Joint Proxy Statement.
• Parent and Company will use reasonable best efforts to have the Form S-4 declared effective and keep it effective until the merger is consummated.
• Each company will establish a record date and convene a special meeting of its shareholders/stockholders to seek approval for the merger and the issuance of Ryerson common stock.
• Parent will submit a listing application with the NYSE for the shares of Parent Common Stock to be issued in connection with the Merger.
• The parties will cooperate to obtain all necessary regulatory approvals, including under the HSR Act and other antitrust laws.
• Parent and Company will cooperate to develop an optimal global financing structure for the combined entity and implement necessary arrangements for existing indebtedness.
• The Company will deliver a FIRPTA certificate to Parent at closing.
• Parent and the Company will cooperate to cause the delisting of Olympic Steel common stock from NASDAQ and its deregistration under the Exchange Act post-closing.

Key Dates

Recommendation

The all-stock merger offers Olympic Steel shareholders participation in the combined entity. While the deal has board approval and is intended to be tax-free, the consummation is subject to shareholder and regulatory approvals. Investors should hold pending further details and the successful integration of the companies, as the immediate impact on share price will depend on market perception of the exchange ratio and future synergies.

Keywords

Merger, Acquisition, Olympic Steel, Ryerson Holding Corporation, All-stock deal, SEC filing, Corporate governance, Steel industry, Metals distribution, Shareholder approval, Regulatory approval, Stock exchange listing, Executive compensation, Risk management