United States Steel Corp. just signed a deal to acquire Dallas oilfield products provider Lone Star Technologies Inc. in an all cash transaction valued at $2.1 billion. U.S. Steel will tender $67.50 per share in cash for Lone Star. The agreement was unanimously approved by the boards of directors of both firms. The price per share represents a premium of approximately 39% to Lone Star's closing share price of $48.45 on March 28, 2007, and a premium of approximately 43% to its 90- day average trading price.
Pittsburgh-based U. S. Steel will pay for the acquisition through a combination of cash on hand, three new fully committed bank credit facilities provided by J.P. Morgan Chase & Co. and other financing. J.P. Morgan Securities Inc. and Morgan, Lewis & Bockius LLP acted as financial and legal advisers, respectively, to U. S. Steel. Goldman, Sachs & Co. and Weil, Gotshal & Manges LLP acted as financial and legal advisers, respectively, to Lone Star.
U.S. Steel itself has been rumored as a takeover target. It was reported that Arcelor SA would seek to defend itself against a hostile bid by Holland's Mittal Steel Co. NV by making an offer for U.S. Steel.
Lone Star has been busy fortifying its assets around the globe. In Aug. Lone Star said it would buy a 40% stake in Hengyang Valin MPM Steel Tube Co. Ltd. for $132 million in a venture with Hunan Valin Steel Tube & Wire Co., Ltd., one of China's largest steelmakers. Later, the company made a joint venture with Grupo Peixoto de Castro, a Brazilian-based holding company with businesses in the steel, oil, petrochemical, chemical, real estate and financial industries. In December, Lone Star formed a JV with the Welspun Group, one of India's leading manufacturers of tubular products and textiles.
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