NKK Corp. of Japan and Siderca S.A. of Argentina have signed a letter of intent pursuant to which they have agreed to build a strategic alliance that would combine their marketing and technological strengths in relation to the manufacture and sale of seamless steel pipe.
Siderca is the controlling shareholder of Dalmine S.p.A. of Italy and Tubos de Acero de Mexico S.A. of Mexico. They form together the DST Group, which is part of the larger Techint Group.
Pursuant to the letter of intent, NKK and Siderca would jointly own a Japanese corporation that would hold NKK's seamless steel pipe business. Siderca would own 51% of the equity of such corporation, while NKK would own the remaining 49%. NKK would also supply the requirements for billets and utility services of the new joint venture company.
In conjunction with the investment in the joint venture company, NKK would provide Siderca and its affiliates with technical assistance regarding steel and steel pipe manufacturing. Siderca will make available to the joint venture company its worldwide marketing network. In turn the joint venture company would market in Japan steel pipe manufactured by Siderca and its affiliates.
As a result of the alliance, the joint venture company will become a part of the DST Group which will now add to its manufacturing facilities in Europe, North America and South America a facility in Asia. The DST Group will now have access to NKK's highly valued technology for the making of seamless steel pipe. The joint venture company will take advantage of DST's extensive commercial network.
The two companies expect to finalize the definitive agreements and have the alliance operative during the first half of year 2000, subject to any clearances that may be required by applicable laws.
