The company said it won't make work force changes.
By CYNTHIA VINARSKY
and DAVID SKOLNICK
VINDICATOR STAFF WRITERS
YOUNGSTOWN -- North Star Steel's seamless pipe mill in Youngstown is about to get a new owner from the Lone Star State.
Lone Star Technologies, a Texas producer of steel pipes and tubes for the oil and electricity industries, has agreed to buy North Star's Tubular Steel Division, including the pipe mill on Martin Luther King Boulevard here, for $430 million.
The company outbid another tube maker, Maverick Tube Corp. in St. Louis, Mo., which reportedly was offering $400 million for the division.
Lone Star is buying only the tubular steel division, which includes the Youngstown plant and a tube processing plant in Houston, from North Star parent Cargill, Inc. The companies said the sale should be complete by the fourth quarter.
Cargill is not selling six other steel mills that are part of its North Star division.
Praise: Rhys J. Best, chairman and chief executive of the Dallas-based Lone Star, said the purchase will expand the company's product range. He praised the mills for their "distinguished track record of operational excellence and strong financial performance."
"We are delighted to welcome the tubular division management and employees onto our team," he said.
Greg Lauser, a spokesman at Cargill's Minneapolis, Minn. headquarters, said Lone Star doesn't expect to make any management or work force changes as a result of the acquisition.
Employees: North Star's Youngstown mill employs about 425, and the Houston plant has about 150 workers. The Youngstown facility also provides employment for about 140 contract workers. "It's a win-win," Lauser said. "We worked very hard to make sure that we found someone who would grow the business, and in this case we thought the best way would be an alignment with another company committed to the oil and gas well industry."
Based in Dallas, Lone Star Technologies is a management and holding company that produces oil field products, specialty tubing products and flat rolled steel. It produces welded pipes, Lauser said, but none of its facilities make seamless pipe like that produced at the Youngstown plant.
Seamless pipe is used to line the shafts of oil wells, especially those used for deep underwater drilling.
Word that the sale had been finalized first surfaced Thursday morning when Cargill officials notified U.S. Sen. George V. Voinovich that his planned tour of the Youngstown pipe mill had been canceled.
Discussion: The Republican senator, who planned to tour the plant as a part of his visit to the Mahoning Valley, said he was told that management officials were discussing the sale of the plant with employees.
"Cargill just spent $500 million purchasing some operation and they're looking for some cash," Voinovich said, explaining the sale.
A published report said Cargill wanted to get out of the steel business and concentrate on its primary businesses: agriculture feed and food processing.
Jim Cowan, general manager of North Star's Youngstown and Houston pipe mills, could not be reached for comment Thursday evening.
He said last week that the other North Star mills produce flat-rolled steel, steel rods and bars, and related products and most are struggling, like the rest of the domestic steel industry.
Profitable: The Youngstown and Houston pipe mills are "at the top of their game," he explained, because they service the gas and oil well drilling industry. North Star officials have been reporting brisk business for the past several months because of increased oil and gas drilling worldwide.
Lone Star Technologies, with 2,358 employees, trades on the New York Stock Exchange under the symbol LSS. Its stock closed Thursday at $21.50, down 52 cents from the day before, and its price has ranged from $18.62 to $54.75 over the past 52 weeks.
The company reported profits of $29.7 million in the six months ending June 30, up 87 percent because of increased oil field product shipments and pricing.
Cargill, with 85,000 employees in 60 countries, is the nation's largest privately-held company and acquired North Star in 1974. With a net worth of $7.5 billion, it reported profits of $358 million for the 2001 fiscal year, compared with $480 million in fiscal 2000, a decrease of 25 percent.