Ryerson Holding (RYI) saw its stock price plummet 12.26% in Wednesday's pre-market trading session, following the announcement of a merger agreement with Olympic Steel (ZEUS). The significant drop reflects investors' concerns about the terms of the deal and its potential impact on Ryerson's shareholders.
According to the merger agreement, announced late Tuesday, Olympic Steel shareholders will receive 1.7105 Ryerson common shares for every Olympic Steel common share they own. This exchange ratio implies a substantial premium for Olympic Steel shareholders, which explains the contrasting market reactions: while Ryerson's stock is falling, Olympic Steel's shares rallied 16% in pre-market trading. The merger will result in Olympic Steel shareholders owning approximately 37% of the combined company, raising concerns about share dilution among Ryerson investors.
The leadership structure of the new company will see Ryerson's current CEO, Eddie Lehner, maintain his position as CEO of the combined entity, while Olympic Steel's CEO, Richard Marabito, will transition to the role of chief operating officer. Additionally, Olympic Steel's Executive Chairman, Michael Siegal, is set to become the chairman of the board for the merged company. While the companies tout the complementary nature of their operations and potential synergies in the metal distribution industry, Ryerson investors appear to be weighing the short-term costs against the long-term benefits of the merger, which is expected to close in the first quarter of 2026.
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