| NEW YORK
NEW YORK U.S. steel firm John Maneely Co is being sold to Russian rival Novolipetsk Steel for $3.5 billion by buyout firm Carlyle Group and its other co-owners, the companies said on Tuesday.
Carlyle paid $550 million for the company in March 2006 and then merged it with two subsequent acquisitions, Atlas Tube Inc and Sharon Tube Co.
John Maneely's other owners include the Zekelman family. Barry Zekelman was previously CEO of Atlas.
The deal is notable as it comes in a tough market for buyout firms to exit investments made during the private equity boom, which ended a year ago. A slowing economy and tough financing markets made it harder to sell their assets.
A source familiar with the matter said Washington, D.C.-based Carlyle made several times the equity it invested in the deal.
The deal will be financed from available bank commitments, and a $2 billion bridge loan provided by Merrill Lynch, Deutsche Bank and Societe Generale. Merrill Lynch advised Novolipetsk. JP Morgan, Goldman Sachs and GMP Securities advised John Maneely.
The companies said the deal is expected to close in the fourth quarter.
John Maneely, based in Beachwood, Ohio, makes steel pipes and tubes.
Seamless steel pipes, known as tubular goods, are in short supply as high energy prices have spurred oil and gas companies to increase drilling. Among other uses, tubular steel is used to move oil and gas from fields to markets.
Earlier this month, pipemaker Tenaris SA said its North American tube sales soared 42 percent in the second quarter and that its inventories had fallen to their lowest level in six years.
Russia is the world's fourth-largest steel producer.
(Additional reporting by Michael Erman in New York, editing by Leslie Gevirtz, Richard Chang)