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. Last Updated: 07/27/2016

TMK Holds Talks With Ukraine's Interpipe

TMK, the world's third-biggest steel pipe maker by market capitalization, said Friday that it was in talks with Ukrainian producer Interpipe over "a potential transaction," but stopped short of confirming they involved a possible tie-up.

TMK, owned by billionaire Dmitry Pumpyansky, said in a statement that talks were at an exploratory stage and that there was no certainty a deal would result.

Interpipe said it was in talks with some market players, including TMK, on the future development of its pipe business.

"Interpipe's strategic goal is to do an IPO. This strategy has been approved and cleared by our shareholders and is currently implemented by Interpipe's management," an Interpipe spokesman said.

Market sources said last month that the firms were in merger talks, and analysts said Friday that a consolidation move could be perceived well by the market.

"TMK's expansion will be taken positively by the market if the price is right," Renaissance Capital analyst Yury Vlasov said. "The market will value the advantages of consolidation within the sector."

TMK, or Trubnaya Metallurgicheskaya Kompania, is the main Russian supplier of pipes used in the booming oil and gas industry and counts Gazprom among its customers.

The company raised over $1 billion in a London share listing last year that was more than 19 times oversubscribed, and is currently valued at more than $8 billion.

"Judging by the market capitalization and net debt of TMK, the upper estimate for a deal could be $3.3 billion," Alfa Bank analyst Valentina Bogomolova said.

Other analysts valued a potential deal at $2 billion to $2.8 billion.

Pumpyansky, TMK's 43-year-old chairman and majority owner, was ranked Russia's 20th-richest man with a personal fortune of $5.4 billion in the latest Russian edition of Forbes magazine.

Interpipe is controlled by tycoon Viktor Pinchuk, one of Ukraine's richest men and the son-in-law of former President Leonid Kuchma.

TMK produced 2.15 million tons of steel and shipped 3.02 million tons of steel pipe in 2006. It said in January that it had financed 30 percent of a strategic investment program that runs until 2010.

The company accounted for 56 percent of Russia's steel pipe exports last year and controls the Volzhsky, Seversky and Sinarsky pipe plants and Taganrog Steel Plant, all in Russia. It also owns the Romanian companies Artrom and Combinatul Siderurgic Resita.

Interpipe produced 1.2 million tons of steel pipes in 2006 and owns the Nizhnedneprovsky, Novomoskovsk, Nikopol and Nikotube plants, the Mogilevsky steelworks and Nikopol ferro-alloy plant.