* Shareholder votes on Shaw deal likely to be held in next
* Reports that backlog declined at the end of the quarter
By Braden Reddall
Oct 23 Chicago Bridge & Iron Co reported
a higher-than-expected quarterly profit as it aims to complete a
takeover of Shaw Group Inc by early next year, with
both sets of shareholders expected to vote on the deal within
the next several weeks.
Shaw, which like CB&I is an energy-focused engineering
company, had posted results on Friday along with a 2013 forecast
below market estimates, while it faces down growing investor
resistance over the proposed $3 billion deal.
CB&I said on Tuesday that shareholder votes would likely be
held in late November or early December, depending on when the
regulatory filing is done. They will be closely watched, with an
investor opposing the deal saying it will take 'no' votes from
only 13 percent to 17 percent of Shaw shareholders to stop it.
That is because holders of 75 percent of Shaw's shares must
support the sale, excluding shares owned by any person holding
more than 5 percent, according to Denali Investors LLC.
"The next major milestone will be the filing of the final
proxy statement, which is in process now," CB&I Chief Executive
Philip Asherman said on a conference call, adding that only a
few remaining regulatory approvals were left to come.
Along with its third-quarter results, CB&I said its backlog
of work declined to $9.5 billion at the end of the quarter from
$10 billion three months before.
Net income rose to $80.2 million, or 82 cents per share,
from $72.2 million, or 72 cents per share, a year before.
Analysts had expected 81 cents per share, according to the
average on Thomson Reuters I/B/E/S. Revenue grew 15 percent to
BIGGER BACKLOG BECKONS
Asherman sees significant growth opportunities, especially
in U.S. petrochemicals and global liquefied natural gas, and
believes Shaw will give it the scale to compete even better with
larger rivals such as Fluor Corp and KBR Inc.
Folding in Shaw's $17 billion of booked projects, CB&I would
be second only to Fluor among U.S.-listed engineering companies
in terms of the size of its backlog.
But Denali, calling CB&I's offer undervalued, has written to
Shaw's independent directors to express concern that the
chairman and chief executive, James Bernhard, seemed to want to
close the deal early next year to allow him to run for the U.S.
Senate or for governor of Louisiana, where Shaw is based.
Shaw has consistently responded to all shareholder concerns
by reiterating that CB&I's $46-per-share offer represented a 72
percent premium to Shaw's closing price the previous trading day
in late July.
Denali has also criticized Shaw for not discussing the deal
or the process with investors, and then for not holding a
conference call for its fiscal fourth-quarter results on Friday.
Shaw's only comment with the results on the deal was that it
was still set to close in the first quarter of 2013. Later, Shaw
acknowledged in its annual report that several "purported
shareholders" have sued the company and its directors, alleging
breaches of fiduciary duties in connection with the deal's
"We believe that these lawsuits are without merit and intend
to contest them vigorously," Shaw added.
Shaw shares are still more than $2 below the proposed buyout
price as analysts wonder whether the deal will ultimately go
through. CB&I's shares had closed 1.5 percent lower at $37.64 on
Tuesday, prior to the release of its results.