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Report: Russia's Evraz steelmaker in talks to buy steelmaker Ipsco

Russia's biggest steelmaker, Evraz Group SA, which completed a major acquisition in the US at the start of the year, is in talks to acquire Canada-US steelmaker Ipsco Inc., a business daily reported Thursday, citing unnamed sources.

With headquarters in Lisle, Ill., Ipsco Inc. operates four steel mills, 11 pipe mills, nine product-finishing plants and nine scrap processing centers at 25 locations in the United States and Canada. Evraz's management held acquisition talks several weeks ago with Ipsco, the Vedomosti paper said, citing two unnamed businessmen familiar with Evraz's shareholders. Rina 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 United States for $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. Billionaire Chelsea soccer club owner Roman Abramovich holds 41% 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 Q4 profit was down 18% as costs rose while volumes were scaled back, and slackness is expected to continue into this year. The maker of tubular steel and steel plate, 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. (