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CB&I Announces Agreement To Acquire The Shaw Group

Stocks in this article: CBI SHAW

CB&I (NYSE: CBI) announced today that it has entered into a definitive agreement to acquire Shaw Group (NYSE: SHAW), a Fortune 500 company primarily focused on serving clients in the power generation and government services sector. The acquisition is expected to close in early 2013.

Combining CB&I and Shaw will create one of the most complete energy focused technology, engineering, procurement, fabrication, construction, maintenance, and associated services companies in the world. With a global workforce of nearly 50,000 employees, backlog of over $28 billion, and engineering and fabrication facilities strategically located on all continents, the company will have the critical mass necessary to execute the largest energy infrastructure projects now and into the future.

"This is a highly compelling transaction that we believe will create significant value for our shareholders,” said Philip K. Asherman, President and CEO of CB&I. “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, from Power Generation to LNG, from Refining to Gas Processing, from Offshore to Oil Sands, and beyond. We will have the capabilities and the expertise to provide our clients with the full range of solutions, wherever they are in the world. Most important, we will have the experience and relationships necessary to successfully meet and exceed our clients’ expectations.”

CB&I will acquire Shaw for $46.00 per share in cash and stock. Shareholders will receive $41.00 in cash and $5.00 in CB&I equity (0.12883 shares based on an agreed upon recent average stock price of $38.81 per share) for each share of Shaw stock at closing. CB&I will use cash on the balance sheets of both companies, along with approximately $1.9 billion in debt to finance the acquisition. Based on the estimated cash position of Shaw at the end of its August 31, 2012 fiscal year, this equates to an enterprise value of approximately $2.0 billion. Using consensus estimates, the implied transaction multiple is 7.0x Shaw’s fiscal 2012 adjusted EBITDA. First year earnings per share are anticipated to be double-digit accretive before transaction related costs.

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