Chicago Bridge & Iron Co. NV said Monday that it would acquire Shaw Group Inc. in a $3.04 billion deal designed to create a global engineering and construction company focused on the energy industry.
CB&I, which is based in the Netherlands but has its administrative headquarters in The Woodlands, Texas, is paying $46 per share for Shaw, a premium of 72% over the target's $26.69 close Friday. The consideration includes $41 in cash and 0.12883 shares of CB&I.
The buyer said it would use cash on the balance sheets of both companies along with $1.9 billion in debt to finance the purchase, which based on the estimated cash position of Shaw at the end of its Aug. 31, 2012, fiscal year equates to an enterprise value of about $2 billion.
Shaw, of Baton Rouge, La., provides engineering, construction and maintenance services to energy companies including oil drillers and utilities, and has been contracted to build the first nuclear reactors in the U.S. since 1978. The company generated sales of $5.9 billion in 2011, but has been under pressure of late after missing analyst earnings per share expectations on sluggish demand for nuclear power plants and other declines in its project backlogs.
CB&I, which counts Chevron Corp. and Exxon Mobil Corp. as key customers, said the combination would create a construction company with 50,000 employees spread across the globe and a backlog of more than $28 billion worth of projects, giving it the critical mass necessary to take on energy megaprojects.
Company CEO Philip K. Asherman in a statement said that by adding Shaw, "we will become fully diversified across the entire energy sector," capable of bidding on nearly any project.
"We will have the capabilities and the expertise to provide our clients with the full range of solutions, wherever they are in the world," Asherman said. "Most important, we will have the experience and relationships necessary to successfully meet and exceed our clients' expectations."
Bank of America Merrill Lynch is the financial adviser to CB&I, while Daniel Neff, David Shapiro and Scott Golenbock of Wachtell, Lipton, Rosen & Katz are the company's legal counsel.
Morgan Stanley's Daniel Blank, Mark Eichorn, Jeff Holzschuh and Lyle Ayes are Shaw's exclusive financial advisers, while a Vinson & Elkins LLP team including Keith Fullenweider, Dave Oelman, Jeff Floyd, Steve Gill, Lande Spottswood, James Garrett, John Rosenkild, Chris Colquitt and Julian Seiguer along with Scott Chenevert of Jones, Walker, Waechter, Poitevent, Carrère & Denègre LLP are legal advisers.