NSSMC to Acquire WSP Houston’s Production Facilities
OREANDA-NEWS. October 4, 2012. Nippon Steel & Sumitomo Metal Corporation (NSSMC), through its wholly-owned subsidiary Southern Tube LLC (Southern Tube) in the U.S., has entered into a definitive agreement with WSP Houston OCTG Inc. (head office in Texas, U.S.A.; established in 2008) to acquire its production facilities for heat treatment and threading of Oil Country Tubular Goods (OCTG) for approximately 3.4 billion yen (USD 43 million). After the acquisition, Southern Tube plans to make an additional capital investment and target full-fledged commercial operation by 2015.
1. Objectives of Acquisition
The U.S. is the world's largest OCTG market and is expected to grow further. With the aim of responding to our customers' demand for OCTGs on the back of strong energy-related steel material demand in the U.S., Southern Tube has decided to acquire manufacturing facilities for heat treatnt and threading, make an additional capital investment, and manufacture high-end OCTGs which can withstand severe environments. Base materials will be provided by Vallourec & Sumitomo Tubos do Brasil Ltda (VSB), an integrated seamless pipe steelworks, in Brazil and the Wakayama Steelworks in Japan. Southern Tube will use the acquiring facilities for heat treatment and threading . NSSMC intends to utilize its accumulated customer assets, technology, and product capability and accelerate its global strategy by fully entering the U.S. market.
2. Outline of Acquisition
(1) Assets to acquire
Production facilities held by WSP Houston OCTG Inc., in the U.S., including land, buildings, and equipments (heat treatment, threading, and other facilities)
(2) Acquisition amount
Approximately 3.4 billion yen USD 43 million
(3) Post-acquisition business outline
1) Company name: Southern Tube LLC (Subsidiary of SMI Oil Field Services
Inc. NSSMC Group owns a 100% stake.)
2) Business activities: Heat treatment and threading of OCTG, and others
3) Capital spending: Invest in facilities to enable production of high-end OCTGs