McDermott International (NYSE: MDR) and Chicago Bridge & Iron Company (NYSE: CBI) announced yesterday that they would merge in a transaction valued at $6 billion to create a fully vertically integrated onshore-offshore engineering, procurement, construction, and installation (EPCI) company. The new company, of which McDermott shareholders will own 53% and CBI shareholders will own 47%, will generate approximately $10 billion in revenues and will have backlog of approximately $14.5 billion.
McDermott offered 2.47221 of its shares for every CBI share held, representing a 3% premium to CBI’s closing price on Monday. The transaction is expected to be cash accretive, excluding one-time costs, within the first year after closing and is expected to generate cost synergies of $250 million in 2019. Significant revenue synergies are also expected.
David Dickson, McDermott’s President and CEO, will become President and CEO of the new company.
The transaction is expected to close in the second quarter of 2018 and is subject to regulatory antitrust approval as well as shareholder approval from both companies.
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