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Tuesday, December 19, 2017

=Chicago Bridge & Iron (CBI) to be acquired by McDermott (MDR) in $6B all-stock deal

CB&I is a large engineering, procurement and construction company with its administrative headquarters in The Woodlands, Texas. CB&I specializes in projects for oil and gas companies.
  • Headquarters: Netherlands
  • The combined company will be fully vertically integrated, providing engineering, procurement, construction and installation to the onshore and offshore energy sectors. It's expected to have revenue of $10 billion and a backlog of about $14.5 billion on a pro-forma basis.

CB&I (CBI) and McDermott (MDR) to merge in $6 bln deal CB&I shareholders will be entitled to receive 2.47221 shares of MDR 
McDermott (MDR) and CB&I (CBI) have agreed to combine in an all-stock transaction to create a premier fully vertically integrated onshore-offshore company, with a broad engineering, procurement, construction and installation service offering and market leading technology portfolio.
  • McDermott shareholders will own ~53% of the combined company on a fully diluted basis and CB&I shareholders will own ~47 percent.
  • CB&I shareholders will be entitled to receive 2.47221 shares of McDermott common stock for each share of CB&I common stock owned (or 0.82407 shares if McDermott effects a planned three-to-one reverse stock split prior to closing), subject to any withholding taxes. The estimated enterprise value of the transaction is ~$6 billion, based on the closing share price of McDermott on Dec 15, 2017. Values CBI at $18.76 based on MDR closing price.
  • On a pro forma combined basis, McDermott and CB&I would have combined revenues of ~$10 billion and a backlog of ~$14.5 billion. The combined co is expected to generate EBITDA growth and strong free cash flow, enabling it to rapidly de-lever.
  • The transaction is expected to be cash accretive, excluding one-time costs, within the first year after closing. It is also expected to generate annualized cost synergies of $250 million in 2019. This is in addition to the $100 million cost reduction program that CB&I expects to have fully implemented by the end of 2017.
  • David Dickson, current President and Chief Executive Officer of McDermott, will be President and Chief Executive Officer of the combined company. 


Chicago Bridge & Iron Company N.V. provides services to customers in energy infrastructure market. The Company provides services, such as conceptual design, technology, engineering, procurement, fabrication, modularization, construction, commissioning, maintenance, program management and environmental services. Its Engineering and Construction segment provides engineering, procurement, and construction (EPC) services. Its Fabrication Services segment provides fabrication and erection of steel plate structures; fabrication of piping systems and process modules, and manufacturing and distribution of pipe and fittings. The Technology segment provides process technology licenses and associated engineering services, and catalysts, for petrochemical and refining industries, and offers process planning and project development services.

Key stats and ratios

Q3 (Sep '17)2016
Net profit margin0.26%-2.25%
Operating margin0.71%-1.36%
EBITD margin-7.06%
Return on average assets0.25%-2.82%
Return on average equity1.09%-18.27%

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