Lone Star Technologies has signed a definitive agreement to acquire the assets of Frank's Tubular International, a Houston-based provider of high-quality threading and inspection services, for approximately $15.2 million in cash and 127,650 shares of Lone Star common stock, subject to customary post-closing working capital adjustments. The transaction is expected to close in early June.
The addition of FTI to Lone Star's family of companies and alliance relationships will further enhance Lone Star's leadership position in oilfield tubular products by delivering the following benefits:
- Expanded commercial leadership -- FTI's full large diameter API and
premium thread casing capabilities complement the tubing and small
diameter casing capabilities of Delta Tubular Processing, the Houston-
based provider of customized OCTG processing services that Lone Star
acquired in early May.
- Improved operational excellence -- FTI is located just 10 miles from
the Delta facility. The proximity between the two facilities and the
efficiency of FTI's operations will enable Lone Star to realize
improved flexibility for small quantity processing, increased capacity
utilization and reduced transportation costs.
- New expansion opportunities -- The addition of FTI's experienced
management team and work force and physical assets and infrastructure
will enable Lone Star to establish a significant base of operations
that is closer to its Gulf Coast OCTG and line pipe customers and can
be expanded to incorporate additional value-added products and
Lone Star will fund the cash component of the acquisition with existing cash. At March 31, 2003, existing cash was $133.9 million. Lone Star does not expect any management or workforce changes as a result of the acquisition.
Rhys J. Best, Chairman, President and Chief Executive Officer of Lone Star, stated, "We are delighted to welcome FTI's talented management team and skilled employees to the Lone Star family. The addition of FTI represents yet another successful step in our strategy to provide our customers with the highest-quality products and services and continue enhancing value for our shareholders. As a result of this acquisition, we will be able to offer our customers, distributors and alliance partners an even broader range of premium OCTG products and services and will be well-positioned to capitalize on new opportunities for revenue enhancement and cost savings going forward."