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Originally published Tuesday, November 21, 2006 at 12:00 AM

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Russia's No. 1 steelmaker buying Oregon Steel Mills

Evraz Group, a steelmaker partly owned by billionaire Roman Abramovich, agreed to buy Oregon Steel Mills for $2.3 billion, the biggest-ever purchase...

Bloomberg News

Evraz Group, a steelmaker partly owned by billionaire Roman Abramovich, agreed to buy Oregon Steel Mills for $2.3 billion, the biggest-ever purchase in the U.S. by a Russian company.

Russia's biggest steelmaker bid $63.25 a share in cash for the Portland company to gain a foothold in the U.S. and create the world's largest producer of rail tracks and wheels, the companies said Monday in a joint statement.

The offer is 7.3 percent more than Oregon Steel's closing stock price Friday of $58.96.

News of the deal pushed Oregon Steel stock up $4.81, or 8.2 percent, to $63.77 Monday. The stock has more than doubled in the past year.

Oregon Steel makes seamless and large-diameter pipes used mainly in the oil and gas industry, as well as coils and plates, a semifinished product used to make pipes.

It was founded by William G. Gilmore in 1926 as Gilmore Steel, changing its name to Oregon Steel Mills in 1987.

About 2,000 people work for Oregon Steel, including 650 in Portland. Besides its corporate headquarters downtown, the company has a rolling mill, a spiral-weld pipe mill and a structural-tubing plant in Portland.

About 1,000 people work at the company's mini-mill in Colorado; an additional 350 make oil and gas transmission pipes and casings at a mill in Alberta, Canada.

Last month, the company reported profit for the first nine months of 2006 was a record $127.9 million.

Oregon Steel's board of directors has unanimously recommended investors accept the offer from Evraz. The deal also needs to be approved by antitrust and other regulators.

"I don't think from a company perspective there will be any changes" for Oregon Steel resulting from the merger, said Ray Adams, chief financial officer.

"The buyer of the company indicated management will stay in place. Management thinks the place is being run pretty good."

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The transaction would raise Evraz to 10th in the world, ahead of Germany's Thyssen-Krupp.

It also would increase the muscle of steelmakers from outside developed countries. Emerging economies now account for six out of the 10 biggest steelmaking nations.

"I suspect we'll end up with no first-world steel companies eventually," Roger Nightingale, a strategist with Millennium Global Investments, said in London.

Cheap loans and profits boosted by low labor costs are helping steelmakers in emerging markets vie for rivals in mature markets, he said.

The deal will allow Evraz to produce 1.5 million tons of railroad products a year, the most in the world, Chief Financial Officer Pavel Tatyanin said.

Prices for track and other processed-steel products are about 30 percent higher in the U.S. than in Russia, said Rob Edwards, an analyst with Moscow-based investment bank Renaissance Capital.

Russia won U.S. approval Sunday to join the World Trade Organization , the last major hurdle for membership.

The accord, signed during an Asian summit in Vietnam attended by presidents Bush and Vladimir Putin, may give a new spark to a relationship that is at a post-Cold War low.

Information from The Associated Press and Seattle Times business reporter Drew DeSilver is included in this report. Bloomberg News reporter Nina de Roy in London also contributed.

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