B.R. likely to lose corporate headquarters when Shaw acquisition goes through

Published Jul 30, 2012 at 10:00 am (Updated Jul 30, 2012)

While economic development officials scramble to respond to news that The Shaw Group—one of the state's largest public companies and Baton Rouge's only Fortune 500 company—is being acquired by Chicago Bridge & Iron Co., a leading local economist says one thing is certain: "Baton Rouge will not be their central nervous system any longer." LSU economist Jim Richardson says it's too early to tell how the $3.04 billion acquisition will affect the local economy and The Shaw Group's local presence. "But given that CB&I's U.S. operations are based in Houston and "they obviously have a large staff and headquarters there already," it's likely a substantial part of Shaw's corporate operations will move out of state. "A lot of it will depend on the economies of scale, how much overlap there is in what both companies do, how much connection there is between the two of them," Richardson says. "Some of that still has to be determined." Still, Richardson believes the deal will be approved by shareholders and the SEC later this year, since it has already gone this far. The cash and stock acquisition, announced this morning, will create one of the biggest energy infrastructure construction companies in the world, with some 50,000 employees worldwide. Shaw currently employs 27,000 worldwide. CB&I offered $46 per share—$41 in cash and $5 in stock—a premium of 72% to Shaw's closing price on Friday, the companies said. Shaw stock jumped 65% to $44.05 in pre-market trading, while CB&I fell 8.5% to $37.25, according to Reuters. Shaw will continue as a business segment branded as CB&I Shaw. Shaw Chief Executive Officer Jim Bernhard Jr. will leave after the deal closes in early 2013, and CB&I CEO Philip Asherman will lead the combined company. "Does this kill your economy? No, not by itself," Richardson says. "But as a growing city you like to have big companies coming here, not leaving." —Stephanie Riegel

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