Top performing stock to watch: U.S. comprehensive engineering, procurement and construction services provider Chicago Bridge & Iron on Monday said it will spend approximately $3 billion in cash plus stock in acquiring its U.S. counterpart Shaw Group (SHAW). This deal will create a large engineering and construction company which is focusing on the energy industry.
Headquartered in the Netherlands, Chicago Bridge & Iron will offer $46 per share – $41 paid in cash, $5 paid as stock – this price was a premium of 72%, compared to the closing price of SHAW stock last Friday. Promoted by this, SHAW stock price rose sharply by over 60% in early trading on Monday while CBI shares fell 8.5%. As of the close of the US stock market today, SHAW stock price reported at $41.50, up 55.49%, or $14.81 while CBI stock price reported at $34.94, down 14.15%, or $5.76, leading the top performing stocks to day.
Chicago Bridge & Iron’s customers include Chevron and Exxon Mobil and other energy companies. The company said it will use the cash in the balance sheet of the two companies, as well as approximately $1.9 billion in debt to fund the acquisition.
Chicago Bridge & Iron also said that the transaction will be able to increase its profitability in the first year after completion of the transaction. The company also said it would expand its business in the fields of nuclear energy, natural gas and electrical coal.
After the completion of the acquisition, part of the Shaw Group will be operated under the the name of CB&I Shaw. The transaction is expected to be completed in early 2013, when Shaw Group CEO JM Bernhard will leave the company, and CB&I CEO Philip Asherman will lead the combined company.
Bank of America Merrill Lynch is acting as Chicago Bridge & Iron’s financial adviser and Morgan Stanley is acting as the exclusive financial advisor for Shaw Group.
Shaw Group, headquartered in Louisiana, Baton Rouge, is engaged in providing engineering, construction, and maintenance services to the oil companies, manufacturers and utility companies. The company generated revenue of approximately $5.9 billion last year and has employees of approximately 27,000.