Engineering and construction firm Chicago Bridge & Iron (NYSE:CBI) announced Monday that it is purchasing Shaw Group (NYSE:SHAW) for $3.04 billion in cash and stock — a deal that represents a 70%-plus premium for SHAW investors.
The news sent SHAW shares up by more than 50% and had CBI plunging by about 15% in midday trading.
The deal, which has the OK from both boards but still requires shareholders’ approval, will result in $41 cash for each Shaw investor, plus CB&I stock for every share of SHAW. The deal should close in early 2013.
After the purchase, CB&I will employ more than 50,000 employees around the globe and claim a backlog of $28 billion, according to the company, which also claims the deal will make it one of the world’s largest energy-focused engineering and construction firms. If the merger is a success, it could have untold implications for America’s energy future.
CB&I said that, excepting the costs of transaction, the deal should foster a double-digit increase in company’s earnings per share in the first year alone.
– Ryan Hauck, InvestorPlace