Offshore-focused McDermott International said the item might buy onshore-based Chicago Bridge as well as Iron to create an integrated construction as well as engineering services provider amid a stabilizing global oil market.
McDermott’s shares were down 9 percent, while CB&I rose 8 percent in after-market trading on Monday.
“Customers worldwide increasingly seek 1 company in which can offer end-to-end solutions, as well as the combination of McDermott as well as CB&I responds to these evolving customer needs,” McDermott Chief Executive David Dickson said on conference call.
McDermott on Monday offered 2.47221 of its shares for every CB&I stock held, a 3 percent premium to the company’s closing cost. The offer translates to an equity value of $1.86 billion based on CB&I’s outstanding shares, according to Reuters calculations.
The estimated enterprise value of the all-stock transaction is actually about $6 billion, based on McDermott’s Friday close, the companies said.
CB&I, whose shares have lost about 44 percent of their value This specific year, has missed analysts’ estimates on revenue as well as profit for the last four quarters. The company has been struggling since the crash in oil prices as well as has been offloading its assets.
The opportunity to combine with McDermott came when CB&I pursued the sale of its technology as well as former engineered products businesses, CB&I Chief Executive Patrick Mullen said in a statement on Monday.
McDermott, on the different hand, has benefited by a slew of contracts wins inside the Middle East including by Saudi Aramco. The company’s shares are up about 3 percent This specific year.
The deal with CB&I, which gets most of its business by the United States, could also help McDermott diversify its revenue streams.
McDermott’s shareholders will own about 53 percent as well as CB&I investors the rest of the combined company, which will have pro forma annual revenue of about $10 billion as well as a backlog of about $14.5 billion, the companies said.
The companies said Dickson will lead the completely new company, which will be based in Houston. The deal is actually supposed to be completed inside the second quarter of 2018.
Goldman Sachs as well as Greenhill are the financial advisers to McDermott, while Centerview Partners LLC is actually the adviser to CB&I.