Take a look at Herb's regular column from this morning.

Now what?

That's what investors in

McDermott International

(MDR) - Get Report


J. Ray McDermott


are asking in the wake of McDermott's bid this morning to buy the shares of J. Ray McDermott that it doesn't already own.

J. Ray is currently 65%-owned by McDermott and operates as a subsidiary. It also plays a crucial role in the McDermott turnaround story that was detailed in this

column earlier this week -- a story that has attracted the likes of

Soros Fund Management

, which recently boosted its McDermott stake.

According to the turnaround story, McDermott CEO Roger Tatrault was expected to either launch a tender offer for J. Ray and/or to buy back a big chunk of McDermott's stock.

But first McDermott has to get total control of J. Ray. As part of today's deal, McDermott has offered to swap 1.15 shares of its stock for each share of J. Ray. Based on the current price of McDermott, that comes out to about $28 per share. One J. Ray investor told me that's simply too cheap for a cash-rich company that owns 60% of the world's heavy lifting barge capacity. These are barges that sell for $150 million to $300 million apiece. (J. Ray shares were up 4 3/8, or 18%, at 28 3/4 Wednesday.)

What's more, the structure of the deal has disturbed some investors. "I'm as surprised as anybody that it's an all-stock offer," says

Donaldson Lufkin & Jenrette

analyst Arvind Sanger. "I don't think this is done yet. I think it's the opening bid."

The lure of J. Ray is its cash. McDermott currently reports $1.4 billion of cash, or $20 per share, but that includes $875 million from J. Ray that McDermott hasn't been able to touch. Once it buys J. Ray McDermott, it'll have access to all of it. That, say investors, would be enough for McDermott to buy back half of its 70 million shares outstanding (if that's what it wants to do) and to make one or two big acquisitions without adding additional debt.

That leads to the question: Whom could McDermott buy? One oil-patch prophet says three likely candidates for McDermott or someone else, in what may very well be a consolidating industry, would be


(OII) - Get Report


Gulf Island Fabrication

(GIFI) - Get Report


Global Industries



Some people on Wall Street smell a good thing, but McDermott's stock isn't racing. At last check, it was up 1 1/4 at 24 1/4.

Reality: McDermott has a horrible history, and it's simply too convoluted a story for most of Wall Street to understand. For now.

McDermott officials couldn't be reached.

Herb Greenberg writes daily for TheStreet.com. In keeping with the editorial policy of TSC, he does not own or short individual stocks. He also does not invest in hedge funds or any other private investment partnerships. He welcomes your feedback at herb@thestreet.com. Greenberg writes a monthly column for Fortune and provides daily commentary for CNBC.