Vallourec potential target for predators; Tenaris, Sumitomo mentioned
Listed French tubular services company Vallourec is being described as a potential takeover target following the difficulties it is currently experiencing, French daily Les Echos reported.
The report cited an industry expert as saying that Paolo Rocca, head of Argentine competitor Tenaris, is interested in Vallourec; Vallourec's market capitalisation has fallen 75% to EUR 1.3bn since the beginning of the year. The report cited a person in-the-know as saying that an agreement between Vallourec and Tenaris would have a strong impact on the workforce and could raise significant competition issues. The source added that the French government was keen to support the independence of the group and clients from the US could also be opposing such an alliance.
Another option could see Vallourec join forces with Japanese group Sumitomo as the two companies already work together in the US and in Brazil. According to the report, the French government would also be opposed to a tie-up with Sumitomo. A source close to Sumitomo claimed that a possible tie-up with Vallourec was not currently under consideration but he added that the Japanese group would be unhappy seeing it link up with a competitor.
The report cited an analyst at Natixis as saying that Vallourec, with a gearing ratio that amounts to 48.3%, does not have any repayment deadline in 2016 and therefore does not need any recapitalisation next year. Nicolas Dufour, head of French sovereign fund Bpifrance, recently mentioned Vallourec as a company that would need cash in the future and that the fund would “accompany” the French group.
Les Echos