Lone Star buying North Star's tubular division for $430 million

Lone Star Technologies Inc. is buying the tubular steel division of North Star Steel Co. for $430 million. The division makes line pipe, standard pipe, mechanical pipe, coupling stock, and casing that are used primarily in the oil and gas exploration and transmission industry.

By the OGJ Online Staff

HOUSTON, Aug. 17 -- Lone Star Technologies Inc. is buying the tubular steel division of North Star Steel Co. for $430 million.

The division makes line pipe, standard pipe, mechanical pipe, coupling stock, and casing that are used primarily in the oil and gas exploration and transmission industry. It has plants in Youngstown, Ohio, and Houston.

North Star is a Cargill Inc. subsidiary. The boards of both firms have approved the deal, which will be completed in the fourth quarter if government regulators do not object.

Lone Star will assume some North Star working capital liabilities. About $130 million of the purchase price will be provided by the private placement of Lone Star common stock, of which up to $50 million can be sold to Cargill.

The division's revenues for the fiscal year ending May 31 were $328.6 million; earnings before interest, taxes, depreciation, and amortization were $76.9 million; and net income was $45.3 million. Assets were $157.4 million as of May 31.

Lone Star said the division has the capability to provide alloy-grade deep-drilling products, a manufacturing capacity of 650,000 tons/year of steel blooms and 550,000 tons/year of seamless tubular products, a solid distribution network, and a proven management team and skilled workforce of 600 persons. No management or employment changes are planned.

Lone Star is a management and holding company whose operating companies are Lone Star Steel, Fintube Technologies, and Bellville Tube. They make and market oil field casing, tubing, and line pipe; specialty tubing products including finned tubes used in heat recovery applications; and flat-rolled steel and other tubular products and services.

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