Chicago Bridge & Iron Company N.V. (NYSE: CBI) – McDermott International Inc. (NYSE: MDR) Merger Given Green light By Shareholders


Chicago Bridge & Iron Company N.V. (NYSE: CBI) – McDermott International Inc. (NYSE: MDR) Merger Given Green light By Shareholders

Chicago Bridge & Iron Company N.V. (NYSE: CBI) is trading higher ahead of a proposed $6 billion merger with Houston-based McDermott International Inc. (NYSE: MDR). The stock has rallied by more than 30% over the past one month after underperforming for the better part of the first quarter.

CB&I-McDermott Merger Approval

The $6 billion takeovers has since inched a step closer to closure after shareholders from the two companies unanimously approved the transaction. More than 50% of shareholders supported the merger. The shareholders also approved a 3-to-1 reverse stock split.

Should everything go as planned the deal should close on May 10 resulting in a vertically integrated engineering and procurement company serving the onshore and offshore sectors?

“With the receipt of these approvals, McDermott and CB&I believe that all material conditions to the combination, other than those to be satisfied on the closing date, have been satisfied,” McDermott in a statement.

Approval of the $6 billion takeover price comes on the heels of McDermott turning down a hostile $2 billion takeover bid by Subsea 7 SA (ADR) OTCMKTS: SUBCY. The deal had threatened to break up the company’s push to acquire Chicago Bridge & Iron. Sub Sea 7 has since withdrawn its hostile bid and said it will seek to expand its current business.

Merger Terms

McDermott $6 billion all-stock offer was announced late last year. Under the terms of the agreement, Chicago Bridge & Iron shareholders are to receive 0.82407 shares of McDermott common stock for each share held.

McDermott shareholders will in return own 53% of the combined company with the remaining 47% going to Chicago Bridge & Iron shareholders. The combined company will retain the McDermott name as CB&1s tank business keeps its current name. The combined company is expected to have a revenue base of $9.9 billion with a backlog of $14.5 billion on a preform basis.

McDermott CEO, David Dickson, and executive vice president Stuart Pence are to retain their positions in the combined company. Garry Luquette will retain the nonexecutive chair role in the combined company board which will have 11 members.

Consolidation in the oil and gas sector has picked pace in recent months in the wake of oil prices ticking higher and stabilizing above the $60 a barrel level. Deal volume is already up by 14% for the year.

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