March 14, 2008 - Evraz Group S.A.(LSE: EVR) (“Evraz”) today announced the acquisition of IPSCO’s Canadian plate and pipe business (“IPSCO Canada”) for a net cost of $2.3 billion. The final value will be subject to certain closing adjustments.
With plants in Regina, Calgary and Red Deer, IPSCO Canada is a leading North American producer of steel plate, as well as pipe for the oil and gas industry. This purchase is yet another step in the implementation of Evraz’s strategy to build a strong platform in the North American downstream markets of steel plate and tubular products.
Commenting on the transaction, Alexander Frolov, Evraz’s Chairman and CEO, said, “Following the successful acquisition of Oregon Steel Mills, this transaction will further enhance Evraz’s existing North American presence in high value-added steel segments. This deal will increase our exposure to the attractive energy and infrastructure sectors throughout the region. We expect substantial synergies from the combination of IPSCO Canada and Evraz’s existing North American operations. We are delighted to acquire a company with the long history and outstanding track-record of IPSCO Canada and look forward to welcoming IPSCO Canada’s employees to the Evraz family of companies.”
Under the structure of the agreed transaction, Evraz will acquire the IPSCO Tubulars business from SSAB for $4.025 billion. Evraz has also entered into definitive back-to-back agreements with OAO TMK and its affiliates (“TMK”), Russia’s leading tubular player, to sell certain of the acquired US businesses for $1.2 billion. In addition, Evraz expects to sell the remaining acquired US businesses of IPSCO Tubulars to TMK for approximately $0.5 billion in 2009. All of these transactions are subject to certain closing adjustments and conditions. As a result of these transactions, the net cost of the acquisition for Evraz is expected to be approximately $2.3 billion.
The transaction will be financed by a combination of a bridge loan raised at the Evraz level, as well as a non-recourse term loan arranged at the acquired company level.
Credit Suisse Securities (Europe) Limited and Goldman Sachs International are acting as joint financial advisors to Evraz. Cleary Gottlieb Steen & Hamilton LLP and Blake, Cassels & Graydon LLP are acting as legal counsel to Evraz.
Forward Looking Statement:
This press release contains forward-looking statements, including statements regarding the expected benefits of the acquisition, which involve a number of risks and uncertainties. These statements are based on Evraz’s current expectations and beliefs. Actual results could differ materially from the results implied by these statements. Factors that may cause or contribute to such differences include: the risk that the conditions to the transaction will not be satisfied; changes in both companies’ businesses during the period between now and the closing; developments in obtaining regulatory approvals for the transaction; the successful integration of IPSCO Canada into Evraz’s businesses subsequent to the closing of the transaction; timely development; competitive products and pricing, as well as fluctuations in demand; cost and availability of raw materials; potential equipment malfunction; plant construction and repair delays; the ability to retain key management and technical personnel of IPSCO Canada; and adverse reactions to the proposed transaction by customers, suppliers and strategic partners. Evraz is under no obligation to (and expressly disclaims any such obligation to) update or alter their forward-looking statements whether as a result of new information, future events or otherwise.
Credit Suisse Securities (Europe) Limited and Goldman Sachs International, who are authorised and regulated in the United Kingdom by the Financial Services Authority, are acting exclusively for Evraz Group S.A. and no one else in connection with the acquisition of the Business and will not be responsible to anyone other than Evraz Group S.A. for providing the protections afforded to clients of Credit Suisse Securities (Europe) Limited and Goldman Sachs International or for providing advice in relation to the acquisition of the Business or any other matters referred to in this announcement.
For further information:
Evraz Group S.A.
Corporate Affairs and Investor Relations
Tel: +7 495 232 1370