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Subsea 7 Bids to Acquire McDermott

Subsea 7 Bids to Acquire McDermott

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23 April 2018

Subsea 7 SA confirms that it made a proposal(1) to the Board of Directors of McDermott International, Inc on April 17, 2018 to acquire the entire issued share capital of McDermott.

Subsea 7 proposed to acquire McDermott common stock for USD 7.00 per share, payable entirely in cash or up to 50% in Subsea 7 stock and the balance in cash. This proposal represents a premium of 16% to the latest closing share price of McDermott on April 20, 2018 and a premium of 15% over the volume weighted average share price of McDermott over the previous 20 trading days.

Subsea 7 has an investment grade financial profile, a strong balance sheet underpinned by a significant net cash position and the ability to execute a transaction quickly. The letter states that Subsea 7 will consider increasing its proposed price upon further assessment of McDermott’s business through discussions with McDermott management. Additionally, for any stock consideration, Subsea 7 is open to discussing listing options for the shares of the combined company. The proposal is subject to the termination of McDermott’s pending transaction with CB&I (NYSE: CBI).

On April 20, 2018, the Board of Directors of McDermott rejected Subsea 7’s proposal.

Jean Cahuzac, Subsea 7’s Chief Executive Officer, stated, "Given the attributes of the proposed transaction and our stated ability to further enhance our proposed terms, we encourage the McDermott Board of Directors to reconsider this compelling opportunity to combine two complementary businesses. Our proposal provides equity upside in a company with a robust financial position, as well as a meaningful premium. We see significant merit in such a transaction for all shareholders, and with our financial and legal advisors continue to be open to discussions.”

Subsea 7 believes there would be significant benefits to all pro forma shareholders from a combination of the businesses:  

Strengthened capabilities: The combined company would be better positioned to execute offshore EPCI projects with market leading conventional and deepwater expertise, experience and assets.

Growth prospects: The combined company would have greater opportunity to grow the companies’ positions in markets with strong long-term growth prospects such as life of field services, renewables and decommissioning.

Synergies: Subsea 7 believes the transaction offers highly visible economies of scale and cost synergies, which would support improvements in profitability and competitive positioning.

Financial flexibility: The combination would maintain a strong balance sheet with an investment grade profile, significant liquidity and a robust order backlog.

Subsea 7’s proposed transaction would not be subject to any financing conditions or Subsea 7 shareholder approval. It would be subject to regulatory and other customary closing conditions.