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$7.7 billion for Ipsco Who’d have figured it would be the Swedes?

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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 recent months.

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 higher.

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.


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