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Shaw To Be Acquired by CB&I

Texas Business reports: THE WOODLANDS—Louisiana’s The Shaw Group Inc. signed a definitive merger agreement with Texas-based Chicago Bridge & Iron under which CB&I will acquire Shaw in a cash and stock transaction valued at approximately $3 billion.

Under the terms of the agreement, CB&I will acquire Shaw for $46.00 per share in cash and stock. Shaw’s shareholders will receive $41.00 in cash and $5.00 in CB&I equity (0.12883 shares based on an agreed upon recent average stock price of $38.81 per share) for each share of Shaw stock at closing.

The combination of CB&I and Shaw will create one of the world’s largest engineering and construction companies focused on the global energy industry. Both companies believe this agreement will create value through a combined company with broader participation in a robust energy market.

“I am extremely proud of the company we have built and operated for the last 25 years. Shaw’s leadership position in the power, environmental and infrastructure industries will complement CB&I’s current business, and I am confident that, together, these two companies will continue to excel,” said Shaw chief executive J.M. Bernhard Jr. in a prepared statement. “While Shaw has been growing in our business and has many opportunities ahead of us, we believe this transaction is in the best interest of and creates significant value for our shareholders, our employees and our customers.”

CB&I plans to operate Shaw as a business sector under the brand name CB&I Shaw to enable the company to retain Shaw’s brand equity and to allow the combined organization to capitalize on the resources, capacity and best practices from each group for the benefit of all stakeholders.

“This is a highly compelling transaction that will create significant value for our shareholders,” said CB&I chief executive Philip K. Asherman in a statement. “Shaw is a great company with tremendously talented employees. By adding them into the CB&I family, we will become fully diversified across the entire energy sector. We will have the capacity and the expertise to provide our clients with the full range of solutions, wherever they are in the world. Most importantly, we will have the experience and relationships necessary to successfully meet and exceed our clients’ expectations.”

The transaction has been approved unanimously by the boards of directors of both companies. CB&I will finance the acquisition using cash on the balance sheets of both companies, along with debt financing pursuant to commitments from Bank of America and Credit Agricole. Closing of the transaction is subject to regulatory approvals, the approval of Shaw and CB&I shareholders and other conditions. The transaction currently is expected to close during the first calendar quarter of 2013.

 

Following the acquisition, Bernhard plans to pursue new business and public service interests.

Morgan Stanley & Co. LLC is acting as Shaw’s exclusive financial advisor, and Vinson & Elkins LLP and Jones, Walker, Waechter, Poitevent, Carrère & Denègre LLP are acting as legal advisors.

The Shaw Group Inc. is a provider of engineering, construction, technology, fabrication, remediation and support services for clients in the energy, chemicals, environmental, infrastructure and emergency response industries. A Fortune 500 company with fiscal year 2011 annual revenues of $5.9 billion, Shaw has approximately 27,000 employees around the world and is a power sector industry leader according to Engineering News-Record’s list of Top 500 Design Firms.