By Lisa Kerner
Charlotte, N.C., March 29 - United States Steel Corp. entered into a definitive agreement to acquire Lone Star Technologies, Inc. for $67.50 per share in cash, or about $2.1 billion.
The price per share is a 43% premium to Lone Star's 90-day average trading price.
Both companies' boards of directors have unanimously approved the agreement, which includes a $59 million termination fee, according to an 8-K filing with the Securities and Exchange Commission.
The transaction is expected to close in the second or third quarter of 2007.
United States Steel said the acquisition, expected to be accretive to its 2007 earnings, will create North America's largest tubular producer. The company will fund the transaction with cash on hand, financing under its existing receivables purchase program and three new and fully committed bank credit facilities provided by JPMorgan.
"We believe that this combination will deliver superior value to Lone Star's shareholders as well as provide our employees with an opportunity to be part of a larger enterprise," Lone Star chairman and chief executive officer Rhys Best said in a company news release.
"Our complementary strengths will better position Lone Star to pursue significant new growth opportunities for the benefit of our customers, distributors and end users."
United States Steel is an integrated steel producer based in Pittsburgh, Pa.
Dallas-based Lone Star manufactures steel tubular products used in oil gas wells.
| Acquirer: | United States Steel Corp.
|
| Target: | Lone Star Technologies, Inc.
|
| Transaction value: | $2.1 billion
|
| Payment per share: | $67.50
|
| Announcement date: | March 29
|
| Termination fee: | $59 million
|
| Expected closing: | Second or third quarter of 2007
|
| Stock price for target: | NYSE: LSS; $48.45 on March 28
|
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