March 18, 2008

Russian steelmaker Evraz announces purchase of Canada’s IPSCO Inc.

MOSCOW

Russian steelmaker Evraz announced it has purchased Canada’s IPSCO Inc. for a net cost of US$2.3 billion.

The purchase is the latest move in Evraz’s strategy to consolidate a strong base in North America for downstream steel products, such as steel plates and tubes, the Russian firm said in a statement.

“This deal will increase our exposure to the attractive energy and infrastructure sectors throughout the region,” said Evraz chief executive Alexander Frolov.

IPSCO became a wholly owned subsidiary of Swedish steel company SSAB in July 2007.

Under the arrangement, Evraz will acquire IPSCO from SSAB for US$4 billion. Meanwhile, Evraz said it has sealed a deal to sell top Russian pipe supplier OAO TMK parts of its U.S. holdings for US$1.7 billion.

Evraz last year completed the takeover of Oregon Steel Mills Inc. for US$2.3 billion, one of the largest investments in the United States by a Russian company.

Evraz already owns steelworks in the Czech Republic and Italy. The company also has extensive holdings in Russia’s coal-mining sector.

Last year, it took control of Yuzhkuzbassugol after two fatal mining accidents, including a methane blast at the Ulyanovskaya mine that was Russia’s worst coal mining accident in more than 60 years.

Millhouse Capital, the holding company of billionaire Chelsea soccer-club owner Roman Abramovich, has a 36.4 per cent stake in Evraz.

IPSCO, which supplies steel to the energy, agricultural and transportation equipment and construction industries, has about 4,300 employees and an annual steelmaking capacity of more than four million tons.

It owns four steel mills, 11 pipe mills, and scrap processing centres and product finishing facilities in the United States and Canada. About 70 per cent of its operations are in the U.S. and 30 per cent are in Canada.

Canadian Press

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