LISLE, Ill. (CP) - Steelmaker Ipsco Inc. has confirmed it's in talks about a potential takeover after a media report about a possible bid by Russia's biggest steel company, Evraz Group SA.
Responding to market rumours and noting a recent rise in its stock price, Ipsco said Thursday it is in discussions that could lead to a potential acquisition of the company.
''There can be no assurance that any transaction will occur, or as to the timing, structure or terms of any transaction,'' said the Canada-U.S. firm based in Illinois.
Ipsco is a leading producer of energy tubular products and steel plate in North America, with an annual steelmaking capacity of four million tons. It operates four steel mills, 11 pipe mills and scrap processing center and product finishing facilities in the U.S. and Canada.
Earlier Thursday, a Russian business daily newspaper said Evraz Group, which completed a major acquisition in the U.S. at the start of the year, is in talks to acquire Ipsco.
Evraz's management held acquisition talks with Ipsco several weeks ago, the Vedomosti paper said, citing two unnamed businessmen familiar with Evraz's shareholders.
Irina Kibina, vice-president at Evraz, declined to comment on the report when contacted by The Associated Press.
In January, Evraz completed the takeover of Oregon Steel in the U.S. for $2.3 billion, one of the largest investments in the U.S. by a Russian company. Evraz already owns steelworks in the Czech Republic and Italy.
Billionaire Chelsea soccer club owner Roman Abramovich holds 41 per cent of Evraz's shares.
Andrei Litvin with the MDM investment bank in Moscow said the deal was ''theoretically possible'' and called IPSCO an attractive and profitable target that would allow Evraz to diversify geographically and in terms of the products it makes.
However, he said there was a question mark over how Evraz would finance the acquisition of a company with a market value of some $6 billion. Since the Oregon Steel deal, Evraz has the highest debt burden among Russian steel companies.
Ipsco booked its best-ever annual results in 2006, but fourth-quarter profit was down 18 percent as costs rose while volumes were scaled back, and slackness is expected to continue into this year.
Ipsco, a major supplier of pipe to oil and gas producers, earned $643.1 million or $13.43 per share for the year. That was up from 2005 net income of $585.8 million or $11.96 per share, on robust demand for energy pipeline products.