McDermott International Inc. and Chicago Bridge & Iron Co. NV announced Dec. 18 that they agreed to an all-stock merger to create a joint company in a transaction valued at $6 billion.
The merger will combine McDermott's presence in the Middle East and Asia and CB&I's operations in the U.S. to create a fully vertically integrated onshore-offshore company with a broad engineering, procurement, construction and installation service offering and market-leading technology portfolio, according to a news release.
CB&I shareholders will be entitled to receive 2.47221 shares of McDermott common stock for each CB&I share, or 0.82407 shares if McDermott effects a planned three-to-one reverse stock split prior to closing. Post-transaction, McDermott will own 53% of the new enterprise and CB&I will own 47%.
The new company will be headquartered in Houston. David Dickson will retain his position as president and CEO of the enterprise. The board will consist of 11 members, with five coming from McDermott, five from CB&I and Dickson. Gary Luquette, nonexecutive chairman of the McDermott board, will serve as the nonexecutive chairman of the combined company's board.
The merger is expected to close in the second half of 2018 and has received the approval of both companies' boards. The combined company is estimated to generate $250 million in annualized cost synergies in 2019, combined revenues of approximately $10 billion and a backlog of approximately $14.5 billion. The transaction is still pending regulatory approvals and shareholder consent from both sides.
McDermott and CB&I said the new company will offer engineered and constructed facility solutions and fabrication services across the full lifecycle as well as greater exposure to end markets including refining, petrochemicals, LNG and power.
The combined company has secured approximately $6 billion of fully committed financing led by Barclays, Credit Agricole CIB and Goldman Sachs & Co. LLC.
Goldman Sachs & Co. LLC and Greenhill & Co. LLC are serving as lead financial advisors to McDermott, and Centerview Partners LLC is serving as the exclusive financial advisor to CB&I.