From Reuters
HOUSTON (Reuters) – Offshore engineering firm McDermott International Inc. (MDR.N) will close its acquisition of Chicago Bridge and Iron Co NV CBI.N on Thursday, creating an integrated onshore and offshore services group that will expand its presence in the Middle East.
McDermott’s offshore engineering and construction work will combine with CB&I’s onshore skills including liquefied natural gas (LNG) and power plants. McDermott will bolster its service offerings in Saudi Arabia, where it is already adding facilities and has contracts with national oil company Saudi Aramco IPO-ARMO.SE.
David Dickson, McDermott’s chief executive officer who this week met with Saudi Aramco executives in Houston, said on Tuesday the kingdom “is going to be a big part of our future. It always will be, for both McDermott and CB&I.”
Last year, McDermott signed a memorandum of understanding with Aramco for a marine fabrication complex at Ras Al Khair. With the exception of an existing fabrication facility, McDermott’s dealings with Aramco are focused so far on offshore, upstream partnerships.
The offshore sector was hard hit by the 2014 downturn in global oil prices, and while prices this year have recovered to over $70 a barrel, offshore activity remains subdued, Dickson said.
“The industry will be cautious for quite a long period of time. I think we’re in a new world where it just takes longer for projects to get to FID [final investment decision],” Dickson said.
The deal, which the companies said is valued at $6 billion including debt, will give McDermott access to major U.S. LNG infrastructure projects, fueled by a massive output of natural gas from shale fields. CB&I is a part of teams handling development of the Freeport LNG project in Texas and the Cameron LNG export plant in Louisiana.
Both projects have been delayed. In December, CB&I said it reached a settlement with Cameron LNG resolving claims against the engineering firm and waiving schedule-related damages.
“Joining forces with CB&I will create a stronger midstream presence. It’s a good mix if you think that oil prices will be low for longer,” said Audun Martinsen, a senior analyst with consultancy Rystad Energy.
Dickson, who took the top job at McDermott in 2013, said the “problem projects” are on better footing now.
“If you look at onshore downstream and onshore LNG, there are some big opportunities coming up,” he said, pointing to projects in Mozambique and the U.S. Gulf Coast.
In accordance with the terms of the business combination agreement, and as a result of the approval by McDermott stockholders of the 3-to-1 reverse stock split resolution, CB&I shareholders will receive 0.82407 shares of McDermott common stock for each share of CB&I common stock tendered in the exchange offer. Each remaining share of CB&I common stock held by CB&I shareholders not acquired by McDermott in the exchange offer was effectively converted into the right to receive the same 0.82407 shares of McDermott common stock that will be paid in the exchange offer, together with cash in lieu of any fractional shares of McDermott common stock, less any applicable withholding taxes. As a result of the combination, CB&I common stock will no longer be listed on the New York Stock Exchange and will cease trading prior to the open of the market on May 11, 2018.
As previously announced, David Dickson is President and CEO of McDermott and Gary P. Luquette will continue as Non-Executive Chairman of the Board of Directors.
The Board of Directors includes:
- Forbes I. J. Alexander
- Philippe Barril
- John F. Bookout, III
- David Dickson, President and Chief Executive Officer, Director
- L. Richard Flury
- Gary Luquette, Non-Executive Chairman of the Board
- James H. Miller
- William H. Schumann, III
- Mary L. Shafer-Malicki
- Marsha C. Williams
