Sep 12 2006
IPSCO Inc. and NS Group, Inc. jointly announced that they have entered into a definitive agreement pursuant to which IPSCO will acquire NS Group, a leading manufacturer of seamless and welded oilfield tubular goods with sales of $677 million for the 12 months ending June 30, 2006 for $66.00 per share in cash.
The acquisition will strengthen IPSCO's position as a leading North American producer of tubular products for the energy sector, while also maintaining its position as the leading North American supplier of steel plate products. The transaction strategically joins complementary product lines and broadens IPSCO's energy product offering by adding NS Group's highly attractive businesses, including seamless pipe and premium oilfield services provided by Ultra, NS Group's recent acquisition. Following the transaction, the Company is expected to have combined annual revenues exceeding $4 billion.
Under the terms of the agreement, approved by both companies' Boards of Directors, IPSCO will acquire all of the outstanding shares of NS Group for $66.00 per share in cash, for an aggregate price of approximately $1.46 billion, including NS Group's net cash. The share price represents a premium of approximately 43% to NS Group's closing share price on September 8, 2006 and a premium of approximately 33% to its 90-day average trading price. IPSCO will finance the acquisition through a combination of cash on hand and debt obtained under a fully committed bank credit facility.
The transaction is expected to be accretive to IPSCO's 2007 earnings per share before giving effect to synergies. In addition, it is estimated that the transaction will generate more than $50 million in annual pre-tax operating synergies, which are anticipated to be fully realized within three years. This acquisition will also position the Company for further growth as a supplier to the energy sector.
Commenting on the acquisition, David Sutherland, IPSCO's President and CEO, said, "This transaction represents a compelling strategic opportunity for IPSCO to become the leading North American supplier to the robust oil and natural gas sector by significantly expanding our pipe product offering and production capacity, as well as our geographic footprint. We are excited about the opportunity to enter the highly attractive seamless business in a leadership position and to enhance our position in welded products. From a production standpoint, this acquisition will enhance IPSCO's steel short strategy by offering additional outlets for steel while preserving the competitive advantage of IPSCO's fully integrated operating platform in both welded and seamless energy tubular products. With a comprehensive portfolio of products, enhanced production capabilities, excellent positions in both welded and seamless pipe, and a strong commitment to quality, service and innovation, IPSCO is well positioned to be the provider of choice in the North American energy pipe industry."
Sutherland added, "This strategic transaction significantly broadens our customer base and augments our leadership team by bringing together the tremendous talent of our respective employee bases as we continue to grow our Company. Moreover, we believe that this transaction will further enhance our ability to provide value-added products and services to our customers and create value for shareholders."
René J. Robichaud, President and CEO of NS Group, stated, "We believe the transaction with IPSCO serves the best interests of our shareholders, providing them with significant immediate value. The combination of IPSCO and NS Group will provide our employees an opportunity to be part of a larger enterprise. IPSCO has indicated that it is their intent to build on our exceptional platform and continue to grow the business over the long term."
The transaction, which is expected to close by year-end 2006, is subject to approval of NS Group's shareholders and other customary closing conditions, including regulatory approvals.