With less than ten days left until special meeting of stockholders, another proxy advisory firm has expressed its support for a proposed merger between McDermott and CB&I.
With all regulatory hurdles cleared and stockholders’ vote set for next week, the combination of the two companies is expected to close in May.
The merger remains subject to approval by McDermott’s and CB&I’s stockholders and other closing conditions.
While waiting for the meeting to happen, Institutional Shareholder Services (ISS), an independent proxy advisory firm, last week urged that McDermott stockholders vote “FOR” each of the proposals relating to the combination with CB&I.
Meanwhile, in an unexpected turn of events on Monday, another engineering giant, the UK-based Subsea 7, offered to take over the entire issued share capital of McDermott. Subsea 7 proposed to acquire McDermott common stock for $7 per share, payable entirely in cash or up to 50% in Subsea 7 stock and the balance in cash.
McDermott has rejected the offer but Subsea 7 has urged it to reconsider.
Also on Monday, McDermott informed that Glass Lewis, an independent proxy advisory firm, has joined Institutional Shareholder Services Inc. (ISS) in recommending that McDermott stockholders vote “FOR” each of the proposals relating to the combination with CB&I to be voted on at the special meeting of stockholders on May 2, 2018.
‘Problem projects de-risked’
In its report dated April 20, 2018, Glass Lewis stated: “Combining with CB&I will enable the company to fulfill several key strategic objectives, namely, increasing its scale, diversifying its business and geographic mix, and adding a portfolio of proprietary technologies that could provide strong differentiation. The combination could also enable the combined company to gain new revenue opportunities and generate meaningful cost synergies, which in turn could help to drive EBITDA growth and free cash flow generation.”
“While we find that the combined company will initially have a higher level of leverage than most of its peers, we believe that the combined company’s leadership team has proven itself to be capable of successfully navigating through such situations and enhancing shareholder value. Further, the most recent preliminary quarterly financial results from CB&I appear to us to corroborate the company’s view that the problem projects at CB&I have been substantially de-risked.”
Glass Lewis concluded: “Based on these factors, and absent a superior available alternative, we believe that the combination is in the long-term interests of McDermott shareholders and warrants support at this time. Accordingly, we recommend that shareholders vote FOR this proposal.”
Commenting on the recommendations from ISS and Glass Lewis, David Dickson, Chief Executive Officer of McDermott, said, “We are pleased that both ISS and Glass Lewis support our transformational combination with CB&I. We strongly urge all McDermott stockholders to follow these recommendations and approve the transaction so we can complete it expeditiously and begin to realize the significant benefits it will deliver for our stockholders and other stakeholders.”
Offshore Energy Today Staff