TAMPA (TheStreet) -- The Brazilian steel giant Gerdau S.A. announced Wednesday that it will take out the rest of Gerdau Ameristeel( GNA), its U.S. affiliate, which makes steel products used largely in the construction industry.

Gerdau already owns more than two-thirds of the Tampa-based steelmaker. For the remaining 33.7%, Gerdau will pay between $1.6 billion and $1.7 billion, or $11 to $11.50 a share, the company said in a press release before Wednesday's opening bell.

Investors promptly bid up Gerdau Ameristeel stock by 54.5% to $11.07 in morning trading. Volume was extreme at 27 million shares, more than 10 times the daily average.

Interpretations of the deal have focused on its meaning not just for the steel industry, but the economy at large. That Gerdau's Brazilian bosses have decided to subsume the rest of Ameristeel probably means that they see a

rebound developing in the beleaguered U.S. construction business

.

Gerdau's price for the U.S. company was viewed favorably by many observers. Despite being about 40% less than the high of more than $19 that Ameristeel stock had reached at the peak of the boom in June 2008, the $11 to $11.50 price tag is still well above the "normalized" multiple of 4.5 to 6.5 times forward EBITDA, wrote Mark Parr, steel-stock analyst at KeyBanc Capital Markets.

According to Parr, Gerdau's price represents a multiple of 9.5 times his 2011 target for earnings before interest, taxes, depreciation and amortization.

Steel stocks in general rode an equities rally Wednesday as other

economic data pointed to an improving U.S. housing market

. The bullish shift comes after a volatile period for steel and metals stocks across the board, as investors worried about moves in China to ease its fast-growing economy, not to mention

fears that the debt crisis in Europe

could spread beyond the continent.

Concerns also emerged recently surrounding the possibility of a steel oversupply caused by manufacturers ramping up capacity too soon in the recovery.

But the Wednesday session produced screens filled with happy green numbers.

U.S. Steel

(X) - Get Report

shares were climbing 2.6% and

Nucor

(NUE) - Get Report

2.7%. Shares of

AK Steel

(AKS) - Get Report

, which recently benefited from some

positive analyst publicity

after a raw materials pricing scare had eroded its stock price, were gaining 4.7%.

Steel Dynamics

(STLD) - Get Report

stock was jumping nearly 6%, while

Commercial Metals

(CMC) - Get Report

-- another periodic subject of

takeover talk

-- was surging by more than 8% Wednesday.

-- Written by Scott Eden in New York

RELATED STORIES:

>>AK Steel Jumps on Upgrades

>>Metals Stocks Off Sharply on Euro Crisis

>>U.S. Steel Rises After Goldman Call

>>U.S. Steel Sees Return to Profit

Follow TheStreet.com on

Twitter

and become a fan on

Facebook.

Scott Eden has covered business -- both large and small -- for more than a decade. Prior to joining TheStreet.com, he worked as a features reporter for Dealmaker and Trader Monthly magazines. Before that, he wrote for the Chicago Reader, that city's weekly paper. Early in his career, he was a staff reporter at the Dow Jones News Service. His reporting has appeared in The Wall Street Journal, Men's Journal, the St. Petersburg (Fla.) Times, and the Believer magazine, among other publications. He's also the author of Touchdown Jesus (Simon & Schuster, 2005), a nonfiction book about Notre Dame football fans and the business and politics of big-time college sports. He has degrees from Notre Dame and Washington University in St. Louis.