US-based engineering services firm McDermott International has reached a $6bn merger agreement with CB&I to create a fully vertically integrated onshore-offshore company.
The combination is expected to result in a broad engineering, procurement, construction and installation (EPCI) service offering and technology portfolio.
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Under the terms of the all-stock transaction, CB&I shareholders will receive 2.47221 shares of McDermott common stock for each share of CB&I common stock owned.
Once the transaction is completed, McDermott shareholders will hold around 53% of the combined company, while the remaining 47% interest will be owned by CB&I shareholders.
The transaction will allow McDermott to have a complementary geographic portfolio and presence in high-growth developing regions, with combined revenues of $10bn and a backlog of $14.5bn.
McDermott International president and CEO David Dickson said: “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.
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By GlobalData“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 capitalise on global growth opportunities.”
The combined company will offer a greater ability to respond to evolving customer needs.
CB&I president and CEO Patrick Mullen said: “The combination with McDermott maximises value for shareholders and provides the opportunity to participate in significant upside potential as we create a premier vertically integrated engineering, procurement, fabrication, construction and installation provider with significant scale, diversification and global presence.”
The transaction is expected to accrue annualised cost synergies of $250m in 2019, as well as revenue synergies.
