Game on… Subsea 7 seeks to gatecrash the McDermott and CB&I merger…

Subsea 7 is seeking to gatecrash the McDermott and CB&I takeover

I said at the time this was a purely defensive merger for MDR, who just didn’t want to get swallowed by GE. So this is effectively a hostile bid by Subsea 7 who must know MDR management well enough to know that they want to be in control not an acquired entity. The publicity around this means they have effectively gone directly to the MDR shareholders having been given the cold shoulder by the MDR Board.

A Subsea 7/MDR industrial combination makes a lot more financial and strategic sense than putting MDR management in charge of a turnaround job in a sector they have no experience in (despite their obvious competence in offshore). Subsea 7 are also unlikely to have done this without engaging an investment bank to sound out some of the key US shareholders and see how receptive they are to this.

Outside of the Middle East this takeover will be paid for with synergies that will see Susbea 7 takeover everything and massive cuts in staff numbers to McDermott. McDermott have won market share lately though because their DNA is to be more cost focused than some other companies, they have a vast technical and operational heritage, Subsea 7 will need to ensure they don’t try and make the company more like them in the Middle East for this to work. But I believe they are backing themselves for a full hostile takeover here and on a purely economic basis they should prevail.

3 thoughts on “Game on… Subsea 7 seeks to gatecrash the McDermott and CB&I merger…

  1. There is always that one gatecrasher that you have left out at that is the Red UDS circus, it is amazing that Red hasn’t become involved and taken on both MDR and SS7. He does as we all know have the perfect economic business plan that no company in the world could possibly beat him at.
    Convince a Chinese yard that you’re the best thing since Reese’s started manufacturing peanut butter cup cakes. Convince investors that you own a huge mobile laundry and you can wash more than dirty coveralls. Convince the young divers that you are there best friend and you can give them a break but first they must work for well under the industry rate. Hell even offer the older guys 1990s rates and even convince the dive crew on the trial dives that they should come along for discounted rates with the carrot being dangled with long term work.
    How possibly could anyone compete against you? What a fool proof business plan however attending meetings to market your boats and telling clients not to ask you about your source of funds may not be the brightest of moves as how could anyone actually use a boat that was a laundry.
    Anyone care to comment on the UDS market strategy??

    Like

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