CBI Shareholders Favor Shaw Buyout

Chicago Bridge & Iron Co. N.V. (CBI - Analyst Report) announced that its shareholders have approved the proposed acquisition of The Shaw Group (SHAW). In a special meeting, over 90% of the company’s shareholders voted in favor of the acquisition, which is expected to complete in the first quarter of 2013. However, the approval from the shareholders of The Shaw Group is still pending.

In order to complete an acquisition, a minimum of 75% vote is required in favor of the proposal to be carried out. The Shaw Group is expected to schedule a shareholders’ meeting on December 21, 2012. Once the acquisition is completed, all the shareholders of Shaw will receive $41.00 in cash and $5.00 in CB&I equity for every stock of The Shaw Group held.

The Shaw Group primarily serves sectors like energy, chemicals, power, environmental, infrastructure and emergency response industries.

Earlier, Chicago Bridge signed an agreement to acquire Shaw Group for $46.00 per share in cash and stock to form one of the largest energy construction and engineering contracting firms globally with a backlog of more than $28 billion. Chicago Bridge plans to finance the acquisition by cash and by debt of around $1.9 billion

Post acquisition, CB&I will become fully diversified across the entire energy sector, including power generation, LNG, refining and gas processing. This acquisition will expand its portfolio of engineering and construction projects and is also expected to boost its nuclear building services. This would add significant business in utility plants, and operations in environment, infrastructure and manufacturing. Besides the broadening of addressable markets, this acquisition will also add scope to its existing operating capabilities.

Chicago Bridge & Iron Company N.V. provides conceptual design, technology, engineering, procurement, fabrication, construction, and commissioning services to energy and natural resource industries worldwide. Chicago Bridge, which competes with Fluor Corporation (FLR - Analyst Report), Jacobs Engineering Group Inc. (JEC - Analyst Report) and URS Corporation (URS - Analyst Report), currently carries a short-term Zacks #3 Rank, which implies a Hold rating on the stock.