Svenskt Stal AB, Stockholm, Sweden, plans to
acquire Ipsco Inc., Lisle, Ill., for $7.7 billion, marking the
largest of several consolidation moves in the steel industry in
The announcement ended widespread speculation
about who was pursuing Ipsco and stands as an example of the
sea change occurring in the current consolidation wave. In the
first wave, which broke in the early part of the decade,
bankrupt steel companies were available literally for pennies
on the dollar. Today, after nearly three years of solid
financial performance, steel company valuations are much
Ipsco, based on its strong performance even
in comparatively slow markets and up-to-date facilities, is
viewed by many industry observers as one of the gems of the
North American industry. It had been in play for some time and
was said to be in talks with Russia's Evraz Group SA as
recently as April.
SSAB, a manufacturer of plate and strip
steel, has a vision of being a global player in the
international steel industry by 2010. Its operations fit with
those of Ipsco, which makes both plate and flat-rolled steel
using comparatively new operations in Montpelier, Iowa, and
Mobile, Ala., in addition to a mill in Regina, Saskatchewan,
and operations acquired recently from NS Group Inc.
Ipsco, one of four major U.S. producers of
carbon plate, also is a significant player in pipe and tube,
principally serving customers in the energy market in western
Canada. However, SSAB may be looking to divest Ipsco's
pipe-making assets at a price that would cover more than half
of the cost of buying Ipsco.
Ipsco shareholders are scheduled to meet July
16 to vote on the proposed deal.