Nov. 14 (Bloomberg) -- The Carlyle Group, the world's second-largest private-equity firm, said OAO Novolipetsk Steel has terminated an agreement to buy its John Maneely Co. steelmaking unit for about $3.53 billion.

Carlyle's DBO Holdings Inc. still will seek to enforce its rights under the Aug. 12 merger agreement in a lawsuit it filed last month in New York federal court, DBO said today in a statement.

Steelmakers worldwide have declined as the worst financial crisis since the Great Depression reduced demand for building materials and sheet metal used in automobiles. Novolipetsk was seeking to gain North America's biggest independent maker of steel tubes, used in plumbing, scaffolding and electrical wiring through the acquisition.

``We are disappointed that NLMK has chosen to breach its obligations under the merger agreement,'' Daniel A. Pryor, a Carlyle managing director, said in the statement.

According to DBO's lawsuit filed on Oct. 15, Novolipetsk failed to close the merger on Sept. 29 as required and then sought to renegotiate the deal by extracting ``a lower purchase price than the one it is contractually committed to pay.''

Carlyle said today it still intends to pursue ``all legal remedies'' and that the Oct. 15 lawsuit still is pending.

Chris Ullman, a spokesman for Carlyle, didn't immediately return a phone message left after normal business hours.

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Last Updated: November 14, 2008 20:45 EST