Engineering and construction services firm Subsea 7 has made a takeover bid to acquire the entire issued share capital of McDermott International, subject to the termination of McDermott’s planned $6bn merger with Chicago Bridge & Iron (CB&I).
Under the offer, Subsea 7 proposed to buy all of McDermott’s common stock for $7 per share, payable entirely in cash or up to 50% in Subsea 7 stock and the remaining amount in cash.
Subsea 7 noted that the proposed acquisition will provide significant growth prospects, synergies and investment grade financial profile.
The offer was rejected by McDermott’s board on the grounds that it was not beneficial to the company or its shareholders as ‘it significantly undervalued McDermott and was not an attractive alternative to the proposed combination with CB&I’, according to McDermott.
In the wake of the rejection, Subsea 7 stated that it will consider offering an improved price after holding negotiations with McDermott management to further assess McDermott’s business.
Subsea 7 CEO Jean Cahuzac said: “Given the attributes of the proposed transaction and our stated ability to further enhance our proposed terms, we encourage the McDermott Board of Directors to reconsider this compelling opportunity to combine two complementary businesses.
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“Our proposal provides equity upside in a company with a robust financial position, as well as a meaningful premium. We see significant merit in such a transaction for all shareholders, and with our financial and legal advisers continue to be open to discussions.”
The transaction pertaining to the merger of McDermott and CB&I, which was announced in December last year, has been approved by relevant regulatory agencies and is expected to close next month, contingent on approval by McDermott’s and CB&I’s stockholders and other closing conditions.
Through the merger, McDermott and CB&I intend to create an integrated onshore-offshore company, with an engineering, procurement, construction and installation (EPCI) service offering and technology portfolio.