Lone Star to form joint venture with Chinese tube maker

Lone Star Technologies Inc. has announced that it has entered into a definitive agreement to form a joint venture with leading Chinese steel producer Hunan Valin Steel Tube & Wire Co. Terms of the agreement state that Lone Star would acquire a 40 percent stake in Valin Tube and Wire subsidiary, Hengyang Valin MPM Steel Tube Co. Ltd., for a consideration of $132 million. Lone Star will also provide technical and operational support for the joint venture. Under terms of the agreement, Lone Star will have exclusive marketing and sales rights in North America to a minimum of 200,000 tons annually of oilfield tubular products produced by the joint venture. Lone Star's press release on the subject states that the company is contemplating future transactions related to the steel tube assets of Valin Tube in Hengyang, Hunan Province, expecting that Lone Star would eventually contribute up to an aggregate of $238 million for 47 percent of the joint venture. Valin Tube and Wire steel tube and related assets in Hengyang currently have an estimated manufacturing capacity of approximately one million tons of pipe per year. Lone Star Technologies, Inc. is a holding company whose main subsidiaries manufacture and market oilfield casing, tubing, line pipe, and specialty tubing products.