March 17, 2014

SHAW GROUP TO BE PURCHASED BY CB&I

By ExchangeMonitor

Shaw Group is set to be purchased by Netherlands-based CB&I in a deal worth approximately $3 billion. The acquisition, which was announced yesterday and has been unanimously approved by the boards of directors of both companies, will involve CB&I paying approximately $46.00 per share of Shaw stock, consisting of $41.00 in cash and $5.00 in CB&I equity. CB&I will finance the deal using cash on the balance sheets of both companies, along with debt financing pursuant to commitments from Bank of America and Credit Agricole, according to a Shaw release. The purchase is still subject to regulatory approvals, as well as the approval of shareholders from both companies. CB&I expects the purchase to be completed in the first quarter of 2013. “When our transaction is concluded, CB&I will be the most complete, energy focused, technology, engineering, procurement, fabrication, construction, maintenance and after market services company in our industry,” CB&I President and CEO Phillip Asherman said in a call with investors yesterday. “Most importantly,” he said, “we expect our joint resource capacity, complementary global capabilities, expertise and competitive positions will lead to increased new awards and earnings well beyond what either stand-alone company could accomplish.”

Shaw is the lead company in Shaw AREVA MOX services, which is constructing the Mixed Oxide Fuel Fabrication Facility at the Savannah River Site. Shaw is also in a subcontracting role as part of a team led by B&W to pursue the new joint Y-12/Pantex management-and-operations contract. During yesterday’s call with investors, Asherman described government work as “a market that you can’t easily bootstrap yourself into,” adding, “That’s a long process to get the position that Shaw has worked for many years to get into where they are.”

Once the purchase is complete, CB&I intended to operate Shaw as a business sector under the name CB&I Shaw 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,” according to the Shaw release. “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,” Shaw Chairman, President and CEO J.M. Bernhard Jr. said in the release. Once the acquisition is completed, Bernhard plans “to pursue new business and public service interests,” the release says.

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