CB&I has entered into a definitive merger agreement to acquire the Shaw Group for a value of about $3bn following the approval from the board of directors of both the companies.

Shaw will receive $46.00 per share in cash and stock and its share holders will get $41.00 in cash and $5.00 in CB&I equity for each share of Shaw they hold.

CB&I is planning to operate Shaw as a business sector under the brand name CB&I Shaw to encash on Shaw’s brand equity, resources, and capacity.

Shaw chairman, president and chief executive officer JM Bernhard Jr. said the company’s position in the power, environmental and infrastructure industries will complement CB&I’s current business.

"While Shaw has been growing in our business and has many opportunities ahead of us, we believe this transaction is in the best interest of and creates significant value for our shareholders, our employees and our customers," Bernhard Jr. added.

CB&I president and chief executive officer Philip K Asherman said the transaction is highly compelling and will create significant value for the company’s shareholders.

"Shaw is a great company with tremendously talented employees. By adding them into the CB&I family, we will become fully diversified across the entire energy sector," Asherman added.

"We will have the capacity and the expertise to provide our clients with the full range of solutions, wherever they are in the world.

Most importantly, we will have the experience and relationships necessary to successfully meet and exceed our clients’ expectations."

CB&I will finance the transaction using cash, debt financing from Bank of America and Credit Agricole.

The merger is expected to create an engineering and construction company focused mainly on the global energy industry.

The deal subject to regulatory approvals is expected to be closed in the first quarter of 2013.