Subsea 7 confirmed that it has recently made an unsolicited bid to acquire its rival US-based offshore oil services company McDermott International for around $2bn.
Image: Subsea 7’s Seven Arctic vessel in operation. Photo: courtesy of McDermott International, Inc.
However, the offer from the UK-based firm was rejected by McDermott, which is in the middle of finalizing a $6bn merger deal with Chicago Bridge & Iron Company (CB&I).
Subsea 7 revealed that it had offered to acquire McDermott for $7.00 per share.
The UK firm said that it is willing to come up with an improved offer for McDermott. Subsea 7 has claimed that it has the ability to quickly execute a definitive agreement in this regard owing to its strong balance sheet supported by a significant net cash position.
Subsea 7 CEO Jean Cahuzac said: “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 said that its proposal will be subject to McDermott’s scrapping of the merger agreement with CB&I, which was approved last month by a Russian antitrust body. The deal has secured all the mandated competition authority approvals and is now subject to meeting of customary conditions such as approval by stockholders of McDermott and CB&I.
In a letter to the board of directors of McDermott, Subsea 7 wrote that it was offering a superior proposal compared to the proposed merger of the US firm with CB&I.
Subsea 7 also said that its combination with McDermott will be well positioned to handle offshore EPCI projects with their expanded conventional and deepwater expertise, experience and assets.
The UK firm also believes that the enlarged company will have increased opportunity to grow the positions of Subsea 7 and McDermott in markets with solid long-term growth prospects, including life of field services, renewables and decommissioning.