Swedish steel company SSAB Svenskt Stal AB said Thursday it made a $7.7 billion offer for U.S.-based steel products maker IPSCO Inc. in a deal that would give it a platform for expansion in North America.

The offer of $160 per share has been recommended by the boards of both companies, SSAB said in a statement.

IPSCO, which supplies steel to the energy, agricultural and transportation equipment and construction industries, had announced in April that it was in negotiations with an unidentified company that could lead to it being bought.

"The transaction will result in an immediate and significant accretion to SSAB's earnings and cash flow, bringing significant strategic and financial benefit," Chief Executive Olof Faxander said.

SSAB said it expects to generate after-tax synergies of around 600 million kronor ($89.2 million) a year from the acquisition, most of which is expected to be within the next two years. It also said it will seek a 10 billion kronor ($1.48 billion) rights offering this year.

IPSCO Chief Executive David Sutherland said the combined company would have a more diversified products that would help it serve customers better.

"It also joins IPSCO with a leading player in the global steel industry and reinforces our already solid position as a leading supplier of steel plate and energy tubulars in North America," he said.

IPSCO shares rose $8.64, or 5.8 percent, to $157.19 in New York. SSAB shares were halted before the announcement but later fell 5.91 percent to 215 kronor ($31.95).

Swedbank analyst Claes Rasmuson said it was a big and strategically smart deal, which "isn't totally risk-free, but it will probably do them well."

"It's interesting that they're not staying lazy and that they're participating in the consolidation of the sector," he said.

He added that the magnitude of the deal and the location of the acquisition was somewhat surprising.

"They've previously said they've wanted to expand in Asia, so this is a bit in the wrong direction I guess, but at the same time they're saying they'll use this to take steps into Asia."

Illinois-based IPSCO has about 4,400 employees and an annual steelmaking capacity of more than 4 million tons. It owns four steel mills, eleven pipe mills, and scrap processing centers and product finishing facilities in the United States and Canada. About 70 percent of its operations are in the U.S. and 30 percent are in Canada.

IPSCO said last month that its first-quarter net profit plunged 27 percent to $109.4 million because of higher costs, but sales in the period rose 14 percent to $1.03 billion.

SSAB said the deal will require approval of two-thirds of the votes cast by IPSCO shareholders as well as Ontario court approval.