Steelmaker ArcelorMittal has announced its plans to purchase a 28.4% stake in Vallourec for approximately $1 billion, aimed at increasing ArcelorMittal’s presence in the tubular business.

The world’s second-largest steelmaker has signed an agreement with funds managed by Apollo Global Management to acquire 65.24 million shares of the France-based company at a price of 14.64 euros per share.

The Luxembourg-based holding company does not intend to launch a tender offer for Vallourec’s remaining shares over the next six months.

“As a producer of premium tubular solutions, it (Vallourec)has a critical role to play in the energy transition, producing vital products for hydrogen, CCS and geothermal applications, for which demand is expected to grow… We look forward to being part of the company’s future,” Aditya Mittal, CEO of ArcelorMittal said.

Vallourec specializes in the production of seamless and welded steel tube products for industrial use. The company expects to generate strong EBITDA for the full year driven by robust tubes pricing in backlog and operational improvements.