Investors say yes, clearing way for merger

Shareholders for Houston energy engineering and construction companies McDermott International and CB&I approved their merger Wednesday after McDermott rejected a hostile takeover bid last week from European rival Subsea 7.

The deal for the merged company, which will maintain the McDermott name and corporate leadership, is scheduled to close on May 10 after acquiring the support of the investors.

The deal was on track until last week, when Subsea 7 made public its $2 billion offer to buy McDermott under the condition that it drop the deal with The Woodlands-based CB&I. McDermott quickly rejected the offer.

Current McDermott investors will hold 53 percent of the new McDermott, while CB&I shareholders will own 47 percent.

The merger combines McDermott's expertise on offshore oil and gas projects, especially in the Middle East, with CB&I's mostly onshore business, which is stronger in North America, especially in the refining, petrochemical, liquefied natural gas and power spaces.

Subsea 7 offered a McDermott $7 a share — a roughly 15 percent premium — as it sought to create a combined company that would be the largest supplier of subsea equipment — umbilicals, risers and flowlines — that connects offshore platforms to the wells and pumps that move oil from the bottom of the ocean.

McDermott, however, rejected the offer as undervaluing the company and argued that the merger with CB&I was better for the long term.

McDermott’s shares closed at $6.57 a share, down 19 cents. CB&I shares jumped more than 3 percent to close at $16.27.