Japan-based Sumitomo Corporation has announced that it has reached an agreement with the US energy-related steel products distributor Edgen Group to acquire Edgen Group for $12 per share. Upon finalization, Sumitomo will purchase 100 percent of the shares of Edgen Group for a total value of approximately $520 million.
The Sumitomo Corporation has been a longtime supplier in the oil country tubular goods (OCTG) industry and has grown from its core business of exporting OCTG to major international oil companies, to providing supply chain management services for on-demand pipe supply at drilling operation sites. It also has an extensive OCTG distribution network in the US, and more recently has been increasing its investments in pipe mills and fabrication of specialized products to broaden its presence in each step of the value chain surrounding the oil and gas market.
According to Sumitomo Corp., the Edgen Group acquisition is expected to further strengthen and expand this network to cover demand for both onshore development, where demand for products including OCTG and line pipe for oil and gas production and transportation is expected to increase from shale activity, and offshore oil and gas development where strong demand for pipe, steel plate, and specialized materials is expected to continue.