McDermott, CB&I Shareholders OK Merger

Shareholders of US Feed and EPC contractors McDermott International and CB&I agreed in separate votes May 2 to the $6bn merger of the two companies.

Upon completion of the transaction – expected May 10 pending satisfaction of closing conditions – McDermott shareholders will own about 53% of the combined company on a fully-diluted basis, while CB&I shareholders will own the remaining 47%.

The combined entity will have annual revenues of an estimated $10bn and an order backlog of some $14.5bn.

McDermott shareholders also approved a 3-to-1 reverse stock split resolution, which means that CB&I shareholders will receive 0.82407 McDermott common shares for each CB&I common share tendered to the transaction.

In April, McDermott fended off a hostile $2bn takeover bid from Oslo-listed and UK-headquartered Subsea 7, a bid aimed at thwarting the McDermott-CB&I combination. 

CB&I has a long track-record of installing LNG facilities, including more than 40 LNG terminals in Turkey, UK, US, Puerto Rico and the Dominican Republic. It also built the Peru LNG export plant and is building two LNG liquefaction plants on the US Gulf Coast: Cameron LNG facility in Hackberry, Louisiana, and Freeport LNG facility in Freeport, Texas.

In March, McDermott and Baker Hughes, a GE company, announced they had been selected to provide front-end engineering design (Feed) studies for BP's Tortue/Ahmeyim field in advance of a substantial ($500mn-$750mn) engineering, procurement, construction and installation (EPCI) contract. Days earlier, it landed a contract from BPTT in Trinidad & Tobago  for engineering and long lead procurement for the unmanned Cassia C compression platform, 65 km offshore Trinidad & Tobago.