Shaw completes $3 billion sale to CB&I
The $3.04 billion sale of The Shaw Group to CB&I is official. Seven months after it was announced, the deal closed this morning, marking the end of an era in Baton Rouge, which has lost its only Fortune 500 company.
The Netherlands-based CB&I, which has U.S. headquarters in The Woodlands, Texas, has been tight-lipped about what the acquisition will mean for employees at Shaw's corporate headquarters here. Shaw's Jim Bernhard told Daily Report earlier this week that he is disappointed communication between CB&I and Shaw employees has not been better. Analysts who track the company say some of those concerns may be justified but that widespread layoffs are not expected.
"Sure, there will be some shifting around of corporate functions and … a lot of the overlap at the corporate level needs to be rationalized," says Brian Konigsberg, an analyst with Vertical Research Partners in Stamford, Conn. "But for the most part, a lot of the staff on the ground will certainly remain."
Konigsberg says if he were working in one of Shaw's operations segments he would not be concerned about job security, but adds: "If I was in the corporate office, it would be a different discussion."
Since the sale was announced last summer, investors have become increasingly comfortable with the idea of the acquisition, a sentiment reflected in CB&I's stock price, which at around $53 per share is slightly higher than it was before the announcement of the acquisition.
"People were very concerned when the deal was announced because CB&I has worked hard over the past few years to build up a reputation for strong execution and operations, where Shaw had its challenges within its specific markets, particularly power and petrochem," Konigsberg says. "I guess there is the question: Will CB&I be able to transition its expertise and really kind of tame the Shaw beast and make it a cleaner, better-executed company? I think now the comfort level has risen among the investor base."
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