United States Steel Corporation and Lone Star Technologies, Inc. announced Thursday that they have reached an agreement whereby U.S. Steel will acquire Lone Star, a tubing manufacturer headquartered in Dallas, TX, for $67.50 per share in cash, i.e. for a total of approximately $2.1 billion. The deal has been approved by the boards of both companies, and is expected to close in the second or third quarter of 2007.
The acquisition will create North America's largest tubular producer and strengthen U.S. Steel's position as a major tubular products producer for the energy sector. In addition, U.S. Steel expects to have an annual North American tubular manufacturing capability of approximately 2.8 million tons by the joining of U.S. Steel's predominantly seamless tubular business with Lone Star's complementary welded tubular business, coupling manufacturing and tubular processing services.
U.S. Steel projects that the acquisition of Lone Star will generate annual pre-tax operating synergies of over $100 million by the end of 2008.
Commenting on the deal, John P. Surma, U.S. Steel Chairman and CEO, said, "This transaction represents a compelling strategic opportunity for U. S. Steel to strengthen our position as a supplier to the robust oil and natural gas sector by significantly expanding our tubular product offerings, our production capacity and our geographic footprint."
In his turn, Rhys Best, Lone Star Chairman and CEO, stated, "This transaction will enable an enhanced and wider range of products, even higher service levels and greater manufacturing efficiencies."
Lone Star Technologies, Inc. primarily makes oilfield casing, tubing and line pipe, and specialty tubing products. United States Steel Corporation, headquartered in Pittsburgh, PA, is a steel producer active in the U.S. and Central Europe. The company makes steel products for the automotive, appliance, container, industrial machinery, construction, and oil and gas industries.