McDermott International Inc. (NYSE: MDR) shareholders on May 2 approved a merger with Chicago Bridge & Iron Co. (NYSE: CBI), also known as CB&I, that creates a vertically integrated onshore and offshore engineering and construction company, thwarting an attempt by offshore drilling contractor Subsea 7 to block the deal.
More than 50% of McDermott shareholders supported the deal and approved a 3-to-1 reverse stock split, according to a spokesman. CB&I shareholders also voted in favor the merger, the companies said, and the combination is expected to close on May 10.
Shares of CB&I were up about 6%, trading at around $16.67, while McDermott shares were up a penny at $6.77.
Oslo, Norway-based Subsea 7 in April had made a $2 billion bid for offshore engineering and construction company McDermott to break up its planned merger with onshore engineering firm CB&I.
Subsea 7 offered $7 per share, either in cash or up to 50% in stock, at the time representing a 16% premium to the price of McDermott shares. McDermott rejected the offer, calling the offer inadequate and committing to its combination with CB&I, which has been valued at roughly $1.68 billion.
Deal-making activity in the oil and gas sector has picked up as international oil prices have recovered to above $70 per barrel follow a deep crash that began in mid-2014. Deal volume was up 19% in first-quarter 2018; however, total value of the deals completed fell 44%, according to data from consultancy PwC.
Subsea 7 had said it could revise its offer if McDermott would work with the company to help it see additional benefits of the deal.
Analysts at Bernstein in April said they believed Subsea 7 had to increase its offer to at least $10 per McDermott share to derail the deal with CB&I.
“If they do not, we believe the bid will founder, and the bungled escapade will damage Subsea 7’s credibility,” according to a note from Bernstein.
Investment firm Tudor Pickering & Holt advised Subsea 7 on its unsolicited offer, according to two sources familiar with the matter.
Recommended Reading
Seadrill Awarded $97.5 Million in Drillship Contracts
2024-01-30 - Seadrill will also resume management services for its West Auriga drillship earlier than anticipated.
Comstock Continues Wildcatting, Drops Two Legacy Haynesville Rigs
2024-02-15 - The operator is dropping two of five rigs in its legacy East Texas and northwestern Louisiana play and continuing two north of Houston.
TPH: Lower 48 to Shed Rigs Through 3Q Before Gas Plays Rebound
2024-03-13 - TPH&Co. analysis shows the Permian Basin will lose rigs near term, but as activity in gassy plays ticks up later this year, the Permian may be headed towards muted activity into 2025.
US Drillers Add Most Oil, Gas Rigs in a Week Since September
2024-03-15 - The oil and gas rig count, an early indicator of future output, rose by seven to 629 in the week to March 15.
US Drillers Add Most Oil Rigs in a Week Since November
2024-02-23 - The oil and gas rig count rose by five to 626 in the week to Feb. 23