Precision Castparts buys into Chinese company

Precision Castparts Corp. on Friday said it has acquired a 49 percent equity interest in a Chinese steel tube manufacturer.

The Portland-based manufacturer of industrial metal components (NYSE: PCP) did not release financial terms of the cash deal with Yangzhou Chengde Steel Tube Co. Ltd.

Chengde makes seamless, extruded pipe used in boilers at natural gas plants. It also makes tubing and pipe for other energy applications, including compressed natural gas.

The company is based in the Jiangsu province of China, where it has nearly 6 million square feet of manufacturing space.

Precision Castparts said the company is leading the Chinese boiler pipe market and is now making moves into the export market.

In a news release, CEO Mark Donegan said Precision Castparts’ Wyman-Gordon subsidiary is already a major player in producing large-diameter interconnect pipe for coal plants. But the company lacks manufacturing capacity for seamless boiler pipe, forcing Precision Castparts to leave that segment of the market, he said.

The deal with Chengde will give Precision Castparts immediate access to the boiler pipe market in China, while using Wyman-Gordon’s distribution capabilities to move Chengde’s products around the globe.

“Working together, Wyman-Gordon and Chengde will be a tough team to beat as we continue to attack power generation opportunities worldwide, with a product offering of boiler pipe, interconnect pipe, and fittings,” Donegan said in the news release.

Precision Castparts shares closed Friday down 1.4 percent to $113.75. Shares have traded between $47.71 and $118.62 in the past 52 weeks.