U.S. Steel Buys Lone Star for $2.1 B

123jump.com Staff
29 Mar, 2007
New York City

Market averages in New York trading rebounded in the early morning trading on revised GDP grwoth rate for the fourth quarter of 2006. European markets also traded higher across the region. U.S. Steel agreed to buy Lone Star Technologies for $2.1 billion, a premium of 39% from close of yesterday. Tenaris, largest seamless tube maker purchased Maverick Tubes in October for $2.8 billion. U.S. Steel with this acquisition will be the largest oil tube maker int the North America.

[R]10:30AM NY – U.S. Steel buys Lone Star Technologies for $2.1 billion.[/R]

Lone Star Technologies ((LSS)) has agreed to be acquired by U.S. Steel ((X)) for $67.50 per share, 39% premium from yesterday’s close. The Lone Star stock jumped $17.92 or 37% at the opening. Total purchase price estimated at $2.1 billion.

U.S. Steel, with this acquisition, will be the largest oil pipes and tubes manufacturing company in the North America manufacturing 2.8 million tons of tubular products, according the company.

U.S. Steel is known for its seamless steel oil tubes manufacturing and Lone Star is known for its welded tubular products and services. The combined operation will strengthen the tubular products portfolio of U.S. Steel and strengthen its position in the oil field service sector. The company projects that combined operations will save $100 million per year before taxes by the year 2008.

Luxembourg based Tenaris S.A. ((TS)), largest maker of seamless oil tubes and products last month completed acquisition of Hydril Corp, maker of valves and metering equipment for oil flows and completed purchase of Maverick Tube Corp in October for $ 2.8 billion.

High level of oil drilling activity around the world is likely to continue for at least three years, however, the oil exploration and drilling costs have risen considerably in the last four years.

[R]9:15AM NY – U.S. stocks are expected to open higher on upward revision of fourth quarter GDP growth.[/R]

Stocks in New York trading are likely to open higher with futures indicating 25 to 30 points premium at the opening. Fourth Quarter GDP growth rate was revised to 2.5% from the previous estimate of 2.2% by the Commerce Department.

Crude oil in London trading is up 15 cents to $64.23 per barrel. European stocks are trading higher across the region on expectations that the U.S. market will rebound in the morning trading. Italy, France, Germany and the UK are trading 1% higher at mid-day trading. Airlines and auto stocks led the rebound.

In overnight trading in Asian markets gained led by a small rise in Japan. Hong Kong led the region with a gain of 1.37% and India advanced 0.74%.

[R]5:00AM Gold advances on Wednesday supported by a surge in oil prices.[/R]
June gold advanced $4.10 to $672.90 a troy ounce on the New York Mercantile Exchange and May silver also gained 17.5 cents to finish at $13.455 an ounce. July platinum rose $5.80 to close at $1,257.80 an ounce, while June palladium gained $1.85 to finish at $357.85 an ounce. The most-active May copper contract added 0.50 cent to settle at $3.0625 per pound.

The front-month May crude oil contract advanced $1.15, or 1.8%, to finish at $64.08 a barrel, the highest settlement for a front-month contract since Sept. 11, 2006. April heating oil also gained 4.1 cents, or 2.3 percent, to end at $1.8274 a gallon. April reformulated gasoline blend stock for oxygenate blending fell 1.58 cents, or 0.8%, to finish at $2.0572 a gallon. April natural gas futures finished 5.5 cents higher at $7.558 a million British thermal units, the highest front-month settlement price since Feb. 23.

Futures on raw sugar in foreign ports were aided by short covering, and the May contracts finished 0.01 cent higher at 10.12 cents a pound. Arabica coffee futures ended slightly higher with May coffee closing 0.25 cent higher at $1.1270 a pound.