Houston energy engineering and construction companies McDermott International and CB&I are combining into a company with a $4 billion Wall Street value and an emphasis on both onshore and offshore projects.
Offshore-focused McDermott will own 53 percent of the merged company in the all-stock deal with CB&I, which has honed in on onshore construction in the liquefied natural gas, petrochemical, refining and gas power generation sectors.
CB&I has shrunk and struggled financially during the bust in oil prices as construction projects stalled, while McDermott suffered in years past before rebounding of late with growth in the Middle East, especially in Saudi Arabia.
McDermott President and Chief Executive David Dickson will serve as CEO of the combined company, which doesn’t yet have a new name. McDermott will control six of the 11 board seats, with McDermott Chairman Gary Luquette remaining the non-executive chairman.
“This transaction combines two highly complementary businesses to create a leading onshore-offshore EPCI (engineering, procurement, construction and installation) company driven by technology and innovation, with the scale and diversification to better capitalize on global growth opportunities,” Dickson said in the announcement.
CB&I CEO Patrick Mullen said the deal evolved from CB&I’s plans to sell its technology business as an debt-reduction exercise. Those talks grew into a total merger, including the technology business that’s part of the deal.The deal is expected to close in the second quarter of 2018. McDermott currently holds a Wall Street market capitalization value of $2.16 billion, while CB&I is valued at $1.82 billion.
The companies combine to employ about 40,000 people, although headcount reductions are typical in these kinds of mergers.
This first appeared on the Houston Chronicle – an Energy Voice content partner. For more click here.