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Thanks to everyone for your replies. I guess I owe a better explanation on what I'm trying to do.

I have a file that has a header, trailer and some detail records.
e.g. file1.txt
...

Hi,

In sed, is it possible to match patterns by directly executing UNIX commands inside sed?

For e.g. -
sed "s/`cat file.txt | cut -d "|" -f2`/replace_string"

Will the above command work?...