TMK was reported on August 21 to have clinched an agreement to acquire 100% in Truboplast Enterprise. In addition, the terms of the transaction and the value were not disclosed. Consolidation of Truboplast in TMK is to be completed by year-end 2007.
This acquisition will enable TMK to accumulate the biggest production capacities of pipe corrosion resistant coating in Russia and also scale up the share of premium class products in output breakdown, according to the press release. In addition, taking into account growth prospects of the Russian oil and gas industry, TMK's focus in the mid term is strengthening its maintenance segment.
For the record: Truboplast is one of the largest Russian manufacturers of insulation for O&G steel pipes. The company possesses a technology for applying external and internal protective coatings to pipes with diameters in the range of 57-720 mm, including oil well tubing, drill pipes, casing, linear and LD pipes. The company's annual insulation coating application capacity is around 2,000 km.
Although these developments are upbeat, at present, TMK shares are significantly overvalued, since the fair price in terms of industry average multiples is $6.50 per share, 24% lower than the current market valuations.
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