United States Steel Corp., Pittsburgh, (NYSE: X) plans to acquire Lone Star Technologies Inc., Dallas, (NYSE: LSS) for $67.50 per share in a deal valued at approximately $2.1 billion in cash.

Lone Star manufactures welded oilfield tubular goods. Pro forma, U.S. Steel will be North America's largest tubular producer and will have annual tubular manufacturing capability of approximately 2.8 million tons.

U.S. Steel chairman and chief executive John P. Surma says, "With a comprehensive portfolio of high-end products, enhanced production capabilities, excellent positions in both welded and seamless pipe, and a strong commitment to quality, service and innovation, U. S. Steel will be better positioned to serve the international oil and natural gas industry as the provider of choice for tubular products.

"Also, because Lone Star is a significant purchaser of hot bands and slabs, this acquisition should allow us to better optimize our domestic hot-end operations over a wider range of market conditions."

Lone Star chairman and CEO Rhys Best says of the deal, "Our complementary strengths will better position Lone Star to pursue significant new growth opportunities for the benefit of our customers, distributors and end users. This transaction will enable an enhanced and wider range of products, even higher service levels and greater manufacturing efficiencies."

The deal will be funded from cash on hand and financing from its receivables purchase program and three new fully committed bank-credit facilities provided by JPMorgan.

J.P. Morgan Securities Inc. is financial advisor to U.S. Steel and Goldman, Sachs & Co. is financial advisor to Lone Star. The deal is expected to close by the third quarter.



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