Russia's TMK sells IPSCO Tubulars to Tenaris for $1.2 bln

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MOSCOW, March 22 (Reuters) - Russian steel pipe maker TMK said on Friday it had agreed to sell its U.S. subsidiary IPSCO Tubulars to pipe producer Tenaris, which has production facilities in the United States and several other countries, for $1.2 billion.

TMK had planned an initial public offering (IPO) of its U.S. division, aiming to raise $465 million to $535 million, but halted that process in February 2018, citing adverse market conditions.

It refiled the necessary paperwork in March 2018, but did not launch the IPO.

On Friday, it said it had agreed to sell 100 percent of shares in IPSCO Tubulars Inc for an aggregate, cash free, debt-free price of $1.209 billion, adding that this included $270 million of working capital.

Shares in TMK initially jumped more than 23 percent on the Moscow Exchange after the announcement. By 1430 GMT, they were trading up 15.1 percent.

"The proceeds of the deal should substantially accelerate TMK's deleveraging," ATON analysts said. "TMK may also opt to channel a part of it to dividend payments."

Chairman Dmitry Pumpyansky said in a statement the deal was in line with TMK's strategy of monetising its international assets.

TMK said on Tuesday it was considering an IPO of its European division, with a possible decision in the first half of 2019.

Analysts at BCS Global Markets said the IPSCO Tubulars deal could make TMK the strongest dividend story in the Russian metals and mining sector.

TMK's free cash flow after interest is seen by BCS at $150 million to $200 million after the deal.

"So free cash flow yield should be as much as 20 percent to 25 percent versus yesterday closing market capitalization", senior analyst Oleg Petropavlovsky said.

(Reporting by Polina Ivanova Writing by Maria Tsvetkova Editing by Edmund Blair)