General contractor Chicago Bridge & Iron Co. N.V. (CBI) Monday said it has entered into a definitive agreement to acquire Shaw Group Inc. (SHAW) for $46.00 per share in cash and stock to create one of the most complete Energy Focused companies globally. Shaw, whose shares are surging almost 65 percent in pre-market activity, said the deal is valued at around $3 billion.
Shaw Group is a Fortune 500 company focused mainly on serving clients in the power generation and government services sector. Shareholders will receive $41.00 in cash and $5.00 in CB&I equity for each share of Shaw stock.
Philip Asherman, CEO of CB&I, said, "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, from Power Generation to LNG, from Refining to Gas Processing, from Offshore to Oil Sands, and beyond.''
The Hague, the Netherlands-based CB&I will use cash on the balance sheets of both companies, and around $1.9 billion in debt to finance the acquisition. Based on the estimated cash position of Shaw as of August 31, this equates to an enterprise value of around $2.0 billion.
Earnings per share in the first year are expected to be double-digit accretive before transaction related costs. The acquisition is expected to close in early 2013.
The acquisition has been unanimously approved by the directors of the boards of both companies. Philip Asherman will continue as President and CEO of the combined company.
CB&I plans to operate Shaw as a business sector under the brand name CB&I Shaw to retain Shaw's brand equity.
Bank of America Merrill Lynch is acting as the financial advisor to CB&I. Wachtell, Lipton, Rosen & Katz is acting as the company's legal counsel.
CBI, which settled at $40.70 on Friday, is falling over 9 percent in pre-market trading. On the other hand, SHAW, which closed at $26.69, is surging 64.6 percent.
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