Tubes Division

The Salzgitter Group through its subsidiary Mannesmannröhren-Werke AG has taken an important step forward in strengthening its competitive position and boosting profitability.

With effect from July 1, 2002, VALLOUREC & MANNESMANN TUBES (V&M TUBES) is taking over the steel tubes activities of American outfit North Star Steel Company with production facilities in Youngstown (Ohio) and Houston (Texas).

V & M TUBES is a joint venture between Salzgitter subsidiary Mannesmannröhren-Werke AG (which holds 45 percent) and French listed company Vallourec SA (55 percent).The Salzgitter Group in turn holds 21% of the shares in Vallourec SA itself. The take-over will take the form of an asset sale with V & M Tubes footing 80 percent of the total US$ 380 million bill. The remaining 20 percent will be accounted for by North Star Steel Company’ long-time marketing partner, Sumitomo Corp. This will put V & M TUBES in pole position in the world market for seamless tubes, as well as dramatically enhancing its standing in the American market and hiking production capacity by 25 percent.

North Star Steel is a leading manufacturer of high-quality seamless tubes in sizes from 5 to 10 ¾ inch for the oil and gas industries (OCTG tubes). Of its annual production capacity of 500,000 tonnes, approx. 80 percent is accounted for the OCTG sector.

North Star Steel employs a workforce of around 560. In 2001 the company generated sales valued at approx. US$ 328 million with a pre-tax profit of US$ 70 million.

For the Salzgitter Group, this commitment marks a further milestone in its offensive growth strategy. This acquisition will have a positive effect both on overall Group results as well as on enterprise value.