THE WOODLANDS, Texas (AP) — Chicago Bridge & Iron Co. said Monday that it has agreed to buy Shaw Group Inc. for about $3.04 billion in cash and stock.
The Woodlands, Texas-based company, also known as CB&I, said the addition of Baton Rouge, La.-based Shaw will create one of the world's most complete engineering and construction companies focused on the energy industry.
The combined company will employ nearly 50,000 people, have a backlog of over $28 billion, along with engineering and construction facilities across the world, CB&I said.
"This is a highly compelling transaction that we believe will create significant value for our shareholders," Philip Asherman, CB&I's president and CEO said in a statement.
Under the deal, Shaw shareholders will receive $41 in cash and CB&I stock worth about $5 for each of their Shaw shares. That represents an about 72 percent premium over Shaw's Friday closing stock price of $26.69.
Shaw shares jumped $17.34, or 65 percent, to $44.03 in premarket trading Monday, while CB&I shares dropped $4.01, or 9.9 percent, to $36.69.
CB&I said it plans to use a combination of cash and about $1.9 billion in debt to fund the deal.
J.M. Bernhard Jr., Shaw's chairman, president and chief executive, said that while his company's business is growing, the deal is in the best interest of its shareholders, employees and customers. He is leaving after the deal closes.
Earlier this month, Shaw posted a $16 million loss for its fiscal third quarter, hurt by expenses stemming from the winding down of some energy and chemicals assets that it expects to sell to French oilfield services group Technip for $300 million in the fourth quarter. But its $1.56 billion in revenue was more than Wall Street expected and it projected a better-than-expected adjusted profit for the full year.
CB&I said it expects the Shaw deal to boost its earnings per share by double-digits in the first year excluding transaction-related costs. Shaw's operations will operate under the brand name CB&I Shaw after the deal closes.
The deal has been approved by both companies' boards, but remains subject to shareholder approval. It's expected to close in early 2013.