Tenaris to buy Hydril for $2.16 billion

HOUSTON (Reuters) - Tenaris SA (TS.N) (TENR.MI) agreed on Monday to buy Hydril Co. HYDL.O, which makes connections and pressure control products for oil and gas drilling, in a cash deal valued at $2.16 billion that will enable the pipe maker to grow its high-end business.

Tenaris, the world's leading maker of tubular products for the oil and gas industry, will pay $97 per share for Houston-based Hydril's common and class B stock, the companies said, representing a premium of around 17 percent to Hydril's Friday closing price on Nasdaq of $83.04.

Tenaris saw its shares drop 0.32 percent to 17.87 euros in Milan, after sliding as much as 1 percent. In Buenos Aires, shares (TENA.BA) were off almost 1 percent to 71.5 pesos per share.

Luxembourg-based Tenaris is controlled by Argentine conglomerate Techint and its shares are listed in Buenos Aires, Milan and New York.

The Hydril deal is Tenaris' second U.S. purchase in less than a year, following the acquisition of Maverick Tube Corp., which makes pipes for the oil and gas industry.

Shares of Hydril were up 14.35 percent, or $11.92, to $94.96 on Nasdaq.

"With Hydril, we will be able to offer our customers worldwide a full range of integral and coupled premium connection products for the industry's most demanding applications," Paolo Rocca, Tenaris's Chairman and chief executive, said in a statement.

Tenaris, which has manufacturing operations in Europe, North America, South America and Asia, said in the statement that it already had lined up bank commitments to help finance the acquisition.

"This complements the purchase of Maverick. Tenaris has its system of premium connections, but these (Hydril's) are for the industry in general. This completes their offerings," said Guido Dennin, analyst with SBS brokerage in Argentina.

In a note to clients, Merrill Lynch described the deal as a positive for Tenaris from a financial and strategic standpoint. The deal will help bulk up its presence in premium markets and the United States.

The acquisition represents about 8 percent of Tenaris' market capitalization, Merrill said.

The deal is subject to regulatory approvals and is expected to close in the second quarter.

Certain members of Hydril's founding Seaver family, which own about 42 percent of the company, have agreed to vote their shares in favor of the merger. Those votes represent about 22 percent of the combined votes rights in favor of the deal, the companies said in a news release.

Citigroup Global Markets were advisers to Tenaris in the deal, while Credit Suisse Securities (USA) and USBX Advisory Services were advisers to Hydril.