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US Steel to Buy Lone Star Tech for $2.1B

Posted on: Thursday, 29 March 2007, 12:00 CDT

NEW YORK - United States Steel Corp. on Thursday said it plans to buy Lone Star Technologies Inc., which makes welded pipe used in oil fields, for $2.1 billion in cash.

The deal will strengthen US Steel's line of tubular products for the energy sector and create North America's largest producer of tubular products, the company said.

Pittsburgh-based US Steel said it will pay $67.50 per Lone Star share - a 39 percent premium to the stock's closing price of $48.45 Tuesday on the New York Stock Exchange.

Shares of Dallas-based Lone Star climbed $17.82, or 36.8 percent, to $66.27 in morning trading on the New York Stock Exchange after rising to a 52-week high of $66.50. US Steel rose $3.39 to $101 on the NYSE after also setting a new 52-week high of $101.59.

US Steel will pay for the acquisition through a combination of cash on hand and financing obtained under its existing receivables purchase program and three new fully committed bank credit facilities provided by JPMorgan.

US Steel expects the purchase to boost per-share profit this year, excluding certain accounting adjustments related to inventory. The company plans to fund the transaction with cash on hand and credit.

The deal is subject to Lone Star shareholder and regulatory approvals and is expected to close in the second or third quarter.

Source: Associated Press/AP Online

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