Subsea 7 ups ante for McDermott International takeover

Subsea 7 ups ante for McDermott International takeover
UPI

April 23 (UPI) — Norwegian offshore services company Subsea 7 announced Monday it made a $2 billion unsolicited bid to take over McDermott International, a U.S. rival.

Subsea 7 said it was offering $7 per share for McDermott, which is a 16 percent premium to Friday’s closing price. A similar proposal from Subsea 7 was tabled Friday, but rejected by McDermott shareholders.

“We see significant merit in such a transaction for all shareholders, and with our financial and legal advisors continue to be open to discussions,” Jean Cahuzac, Subsea 7’s chief executive officer, said in a statement.

The proposal from Subsea 7 is the latest in a steady string of mergers for companies that provide services for the upstream, or exploration and production, side of the energy sector. Subsea 7 and Schlumberger, the largest services firm in the world, formed a joint venture partnership in February that was based on a 2015 arrangement to coordinate broad offshore development work under one umbrella.

Schlumberger last week reported first quarter earnings of $7.8 billion were up 14 percent from the same period last year, but down 4 percent from the fourth quarter.

McDermott, meanwhile, is working on a $6 billion merger with engineering firm Chicago Bridge & Iron. Both signed contracts for work in Saudi Arabia and the merger proposal in December followed the $4.5 billion in agreements signed between the Saudi Arabian Oil Co., known informally as Saudi Aramco, and a handful of service contractors for “megaprojects” envisioned in the energy-rich kingdom.

McDermott offered no comment on the Subsea 7 offer. Last week, David Dickson, the company’s CEO, said it was logical for his company to team up with CB&I as it would diversify McDermott’s client base. All of McDermott’s shareholders were called on to vote for the merger.

Subsea 7, for its part, said it was keen on discussing a sweeter offer with McDermott’s management.

“The proposal is subject to the termination of McDermott’s pending transaction with CB&I,” the Norwegian company stated.

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