SSAB has divested itsIPSCO Tubularsoperations to Russia’s Evraz Group for $4.025 billion (U.S.) in cash. IPSCO Tubulars, acquired as part of SSAB’s acquisition of IPSCO in 2007, had 2007 sales of $2.4 billion. The agreement between SSAB and Evraz involves the sale of 12 tubular locations, including the Regina and Koppel steel mills that directly supply the tubular operations, the Regina coil processing facility and related scrap facilities. Evraz then entered into back-to-back agreements with OAO TMK, Russia’s leading tubular player, to sell certain of the acquired U.S. businesses for $1.2 billion. In addition, Evraz expects to sell the remaining U.S. business of IPSCO Tubulars to TMK for about $500 million in 2009.
SSAB will retain the majority of the steel production capacity it acquired as part of its acquisition of IPSCO, including steel mills located in Mobile, AL, and Montpelier, IA, together with four cut-to-length facilities. In aggregate, these facilities have an annual capacity of about 2.5 million tons of crude steel production.
The transactions, expected to close in the second quarter of 2008, are subject to approvals from U.S. and Canadian regulatory authorities. The IPSCO brand is closely associated with the tubular business and is included in the transaction. The steel operations retained within SSAB will operate as a division within SSAB. SSAB will retain the right to use the IPSCO brand during a transition period.