Welspun-Gujarat Stahl Rohren has entered into an agreement to form a joint venture company with US-based Lone Star Technologies for manufacturing spiral welded tubular products for the oil and gas industry.
Under the agreement, Lone Star and Welspun Pipe, a 100 per cent subsidiary of Welspun-Gujarat Stahl Rohren, would acquire 40 per cent and 60 per cent stake respectively in the newly formed company.
The JV -- Welspun Lone Star Tubulars -- would be funded with an aggregate consideration of around Rs 300 crore (Rs 3 billion) in equity and debt.
"This partnership will leverage our high-quality, efficient line pipe manufacturing capabilities with Lone Star's strong brand name and extensive sales and marketing expertise, allowing us to provide a wide array of products for onshore and offshore line pipe requirements to our customers," Welspun-Gujarat Stahl Rohren Vice Chairman and Managing Director B K Goenka said.
The new facility would be located in South West America and is expected to come online by early March 2008, the saw pipe manufacturer informed the Bombay Stock Exchange.
Under the terms of the agreement, Welspun Lone Star Tubulars would establish a new manufacturing facility capable of producing three lakh net tonnes of spiral welded pipes, for oil and gas applications in North America.
The JV partners expect to realise significant benefits from this transaction, which would be accretive to the earnings per share of both the companies in 2008-09. The shares of the company were trading at Rs 86.35, up 1.17 per cent on the BSE.
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