Subsea 7: Offer Could Change if McDermott Cooperates

 

The Norwegian firm's comments come a week before McDermott's shareholders vote on a planned combination with Chicago Bridge and Iron (CB&I), which McDermott's board has recommended its investors to support while rejected Subsea's proposal

 

"Subsea 7 is open to considering amending its proposal if it can discover additional value through discussions with the McDermott management team," Subsea, one fifth owned by Norwegian billionaire Kristian Siem, said in a statement.

 

Siem, who is also Subsea's chairman, declined to say specifically whether the company was willing to pay more than the $7 per share rejected by McDermott's board on April 20.

 

Some analysts say that, depending on potential synergies, Subsea could increase its offer to a least $10 a share, but it can't do that without more information from McDermott.

 

Subsea repeated on Wednesday its proposal was subject to the termination of McDermott's planned transaction with CB&I.

 

Italian oil services group Saipem, which competes with Subsea in providing undersea solutions for oil and gas firms, has said the bid for McDermott is a sign of industry consolidation that has to be monitored closely.

 

The move comes after Schlumberger and Subsea started talks earlier this year to form a joint venture to deliver undersea installations and services.

 

Oil firms have returned to profit thanks to higher oil prices and cost cuts made in the recent downturn, but their suppliers are still feeling the squeeze. Siem has long called for the industry to consolidate as a way of coping.

 

"Siem doesn't care about the market share, but about the value ... He wouldn't do that (buy McDermott) if it would not create value for shareholders," said analyst Frederik Lunde at Carnegie.