The buyout offer for McDermott International Inc matters to Chicago Bridge & Iron Company N.V. because the two previously agreed to a merger agreement that would have MDR buying CBI in a $6 billion deal.
However, McDermott International has now received an offer from Subsea 7 SA (ADR) (OTCMKTS:SUBCY). This offer would have SUBCY acquiring MDR for $7 per share, which represents an almost 16% premium to the stock’s closing price on Friday.
Subsea 7 SA (ADR) has openly spoke of the deal and said that it was subject to McDermott International Inc terminating its agreement with Chicago Bridge & Iron Company N.V. MDR points out that it rejected the offer from SUBCY, reports MarketWatch.
“It’s a very well played offer from Subsea 7,” Frederik Lunde, an analyst at Carnegie, told Reuters. “Timing wise, it gives enough time for McDermott management to consider alternatives before the May 2 vote.”
Subsea 7 SA (ADR)’s offer for McDermott International Inc could give it a major boost in the subsea umbilicals, risers and flowlines sector. It would make it a market leader by having it control 24% of the sector.
Kristian Siem, the Chairmand and largest shareholder of Subsea 7 SA (ADR), has been pushing for consolidation in the industry. The acquisition of McDermott International Inc would achieve this goal and is the only single-target option to give it a market leader position in the sector.
CBI stock was down 14%, MDR stock was up 12% and SUBCY stock was up slightly as of Monday afternoon.
As of this writing, William White did not hold a position in any of the aforementioned securities.