McDermott International Inc (NYSE:MDR) Tries To Head Off Opposition To CB&I Takeover

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McDermott International Inc (NYSE:MDR) has appealed to its shareholders to ratified the acquisition of CB&I. The appeal comes after Hotchkis & Wiley wrote to McDermott saying it will not support the acquisitions. Hotchkis & Wiley owns 2% of McDermott.

In the letter, Hotchkis & Wiley said the deal is tolerable and there are facts to prove that. However, it expressed concerns that since the deal came up, CB&I has posted dismal results raising questions of how long it will take to fix its business. However, McDermott said it is very optimistic that the deal will be in the best of interest of the company and its shareholders.

In the letter, a spokesman of McDermott said the acquisition creates a company which will span the whole value chain from concept to commissioning. He added that combination will create a lot of value, make the combined company even more competitive as well as allow a more consistent and predictable performance through market cycles.

The spokesman further noted that the management style applied by McDermott has proven to deliver sustainable, profitable growth. He adds that by employing this operational excellence on the combined portfolio, the company will position itself as the best-in-class integrated solutions provider, which is driven by consistency in its processes, systems, execution as well as culture. The spokesman said the management style will benefit the company’s shareholders by unlocking value in the short and long-term. Both companies, according to the spokesman, have secured all the required regulatory approvals and are well positioned to complete the deal. The acquisition is expected to be completed by the second quarter of 2018. McDermott is expected to hold a special shareholders meeting on May 2.

In other news, McDermott Technology (US), Inc and McDermott Technology (Americas),which are subsidiaries of McDermott have priced $1.3 billion of 10.625% senior unsecured notes. The notes are expected to mature in 2024. The offering is expected to be settled on April 18, 2018 and its settlement will be subject to customary closing conditions.

Initially, the notes will be issued by McDermott Escrow 1, Inc. plus McDermott Escrow 2, Inc. Both are special purpose companies created under the laws of the State of Delaware and are subsidiaries of Stichting Hydra Notes.

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