Russia's TMK, the world's third-largest steel pipe maker by market capitalisation, is in merger talks with Ukraine's No 1 producer Interpipe, market sources close to the negotiations said on Tuesday. TMK, which raised over $1 billion at a London listing last year, has annual revenues of over $3 billion and a market capitalisation of just under $8 billion.
"The companies are in merger talks," said one market source. "The process is moving on. There are active discussions about a merger," said another. TMK officials were not immediately available for comment.
One investment banker following the sector said he expected a busy deal pipeline. "Everybody is talking to everybody else in steel and mining. There are combinations of every shape and form under discussion," the banker said.
Another investment banker predicted "a lot of movement" in the pipe sector in Russia in the coming months. "We expect to see purchases and consolidation," he said. TMK is Russia's leading supplier of steel pipes, which are in high demand from the country's oil and gas sector. The company is controlled by chairman Dmitry Pumpyansky.
Soaring oil prices and an oil and gas exploration boom has boosted demand for steel pipes globally, the reason why many analysts are bullish about TMK's prospects. TMK accounts for 56 percent of Russia's steel pipe exports and supplies products to companies in over 60 countries. Its clients include Anglo-Dutch Royal Dutch/Shell, France's Total and Spain's Respol as well as Russian majors LUKOIL, Rosneft and TNK-BP.
TMK's London IPO in October 2006 was more than 19 times oversubscribed, a record for any Russian listing. The offering valued the company at $4.7 billion. Investors have not been disappointed.
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