Quick, how do you say "steel" in Russian?
The U.S. government - specifically the Treasury Department's Committee on Foreign Investment in the U.S. - has approved the takeover of Oregon Steel by Russia's biggest steel company, Evraz.The $2.4 billion deal would be the largest buyout of a U.S. company by a Russian concern, and comes two years after the Russian government approved Alcoa to buy two rolling mills involved in the aerospace industry from Rusal, Russia's big aluminum company.
Prudential Securities analyst John Tumazos said these precedents suggest there will be no major political objections if large, cash-rich Russian metals companies bid for U.S. companies.
"Bids for Alcoa or Alcan from Rusla, bids for U.S. Steel or other steelmakers from Severstal or other Russian steelmakers or bids for Phelps Dodge or Freeport-McMoRan Cooper & Gold from Norilsk Nickel are plausible," Tumazos said in a research note.
Less likely, he said, are takeovers of gold miners like Newmont or Barrick, as their stock-market valuations are fuller and cash flows not as large as those in the industrial metals arena.
"Foreign investments into Russian gold properties are conceivable as Russia is highly prospective," he said.
The CFIUS was originally established in 1975 to monitor and evaluate the impact of foreign investment in the United States. In 1988, it was designated to receive notices of foreign acquisitions of U.S. companies, to determine whether a particular acquisition has national security issues sufficient to warrant an investigation and to undertake an investigation, if necessary.