Sector News

McDermott International and CB&I to merge in a $6-billion deal

December 20, 2017
Chemical Value Chain

McDermott International and CB&I announced on Monday that they had agreed to combine in an all-stock transaction to create a fully integrated onshore-offshore company, with a broad engineering, procurement, construction, and installation (EPCI) service offering and a market-leading technology portfolio.

On a proforma basis, McDermott and CB&I would have combined revenue of approximately $10 billion and a backlog of approximately $14.5 billion.

On completion of the transaction, McDermott shareholders will own approximately 53% of the combined company and CB&I shareholders will own the rest. The estimated enterprise value of the transaction is approximately $6 billion, based on the closing share price of McDermott on 15 December.

The transaction has been approved by the board of each company and is expected to be completed in the second quarter of 2018. It remains subject to antitrust approvals, and approval by McDermott and CB&I shareholders as well as other customary closing conditions.

The move follows CB&I’s decision earlier this year to seek ways to improve financial performance, including the possible divestment of the company’s large technology portfolio. “Customers worldwide increasingly seek a single company that can offer end-to-end solutions, and the combination of McDermott and CB&I responds to these evolving customer needs by creating a leading vertically integrated company. This transaction combines two highly complementary businesses to create a leading onshore-offshore EPCI company driven by technology and innovation, with the scale and diversification to better capitalize on global growth opportunities,” says David Dickson, president and CEO of McDermott. “This unique opportunity to combine with McDermott was presented as we pursued the sale of our technology and former engineered products businesses. Our supervisory and management boards and our management team reviewed multiple strategic options and we ultimately decided this transaction is the best path forward and in the best interest of CB&I, and its shareholders and other stakeholders,” says Patrick Mullen, president and CEO of CB&I.

The combination will unite McDermott’s established presence in the Middle East and Asia with CB&I’s operations in the United States, creating a balanced geographic portfolio with a strong position in high-growth developing regions. It will create opportunities to capture additional value across the entire value chain, the companies say. McDermott and CB&I will have a presence across onshore and offshore, upstream, downstream, and power markets.

By retaining CB&I’s technology business, the combined company will be one of the largest providers of licensed process technologies. McDermott and CB&I anticipate leveraging these capabilities across their customer base to drive follow-on work.

The transaction is expected to be cash accretive, excluding one-time costs, within the first year after closing. It is also expected to generate synergies leading to annualized cost savings of $250 million in 2019. This is in addition to a $100-million cost-reduction program that CB&I expects to have fully implemented by the end of 2017.

The combined company will be headquartered in the Houston area. David Dickson, current president and CEO of McDermott, will be president and CEO of the combined company, and Stuart Spence, current executive vice president and CEO of McDermott, will be executive vice president and CFO of the combined company. Patrick Mullen, president and CEO of CB&I, will remain with the combined company for a transition period to ensure a seamless integration.

The combined company has secured approximately $6 billion of fully committed financing, led by Barclays, Credit Agricole CIB, and Goldman Sachs, and it is expected that permanently funded debt financing in the form of term loans and unsecured bonds will be put into place prior to closing.

By Natasha Alperowicz

Source: Chemical Week

comments closed

Related News

March 19, 2023

EU clears Agrofert’s acquisition of Borealis nitrogen business

Chemical Value Chain

The European Union said Monday that it has approved Agrofert Group’s acquisition of Borealis AG’s nitrogen business after concluding that the deal wouldn’t raise competition concerns. Agrofert is a Czech conglomerate, while Austrian chemical and fertilizer company Borealis is 75%-owned by OMV AG with the remaining 25% held by Abu Dhabi National Oil Co.

March 19, 2023

LyondellBasell acquires European plastics recycler Mepol

Chemical Value Chain

LyondellBasell Industries N.V. and Mepol Group announced they have entered into a definitive agreement for LyondellBasell to acquire Mepol Group, a manufacturer of recycled, high-performing technical compounds located in Italy and Poland.

March 19, 2023

Univar Solutions to be acquired by Apollo Funds for $8.1 Billion

Chemical Value Chain

Univar Solutions Inc and Apollo announced that funds managed by affiliates of Apollo have entered into a definitive merger agreement to acquire the Company in an all-cash transaction that values the Company at an enterprise value of approximately $8.1 billion.

How can we help you?

We're easy to reach