EmailCBI (CBI $36.69 -9.85) announced that it has entered into a definitive agreement to acquire Shaw Group (SHAW $43.98 +17.30), a company primarily focused on serving clients in the power generation and government services sector. The acquisition is expected to close in early 2013. Philip K. Asherman, President and CEO of CB&I states, "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. 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. CB&I plans to operate Shaw as a business sector under the brand name CB&I Shaw. This will enable the company to retain Shaw's brand equity, particularly in the power industry. Bank of America Merrill Lynch is acting as the financial advisor to CB&I, and Wachtell, Lipton, Rosen & Katz is acting as the Company's legal counsel.
