Undeterred by recent rejection, the UK-based subsea engineering company Subsea 7 on Wednesday reaffirmed its interest in acquiring the Houston-based McDermott, which, once again, refused the offer.
To remind, McDermott recently rejected an unsolicited, non-binding proposal made by Subsea 7 to acquire its entire issued share capital.
Subsea 7 had 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, to which McDermott reacted by saying the offer significantly undervalued the company and was not an attractive alternative to the proposed $6 billion worth combination with CB&I.
According to the New York Times, the value of the unsolicited offer by Subsea 7 was around $2 billion.
Commenting on Subsea 7’s first attempt, Institutional Shareholder Services (ISS), a proxy advisory firm which previously endorsed McDermott-CB&I merger, said on Tuesday, April 24 that Subsea 7’s offer “appears opportunistic in light of McDermott’s trading range in recent months.”
The firm also added that the offer did not seem to represent a superior alternative to an accretive transaction with CB&I.
Reaffirming its proposal on Wednesday, Subsea 7 reiterated that it is subject to the termination of McDermott’s pending transaction with CB&I.
“Subsea 7 is open to considering amending its proposal if it can discover additional value through discussions with the McDermott management team,” the company said.
Jean Cahuzac, Subsea 7’s CEO stated that “A combination with McDermott is supported by compelling industrial logic. We would welcome the opportunity to engage with McDermott’s board of directors and management to discuss our proposal and the substantial upside opportunity represented by ongoing participation in the equity, with a view to achieving a combination that would be in the best interests of our respective shareholders.”
McDermott’s proposed merger with CB&I is still in progress with completion date set for May, following a special meeting of shareholders and their approval as well as closure of other relevant conditions. The new combined company intends to retain the name McDermott as well as David Dickson as its CEO.
McDermott bent on rejection
In a statement issued later on Wednesday, McDermott reiterated its rejection of Subsea 7’s unsolicited proposal.
McDermott added it is fully committed to completing the transformational combination with CB&I. The company said its board believes the combination with CB&I is in the best interest of McDermott and its stockholders, and has recommended that McDermott stockholders support the transaction.
Offshore Energy Today Staff