McDermott International shares have spiked nearly 17% this week after receiving - and rejecting - an unsolicited bid from Subsea 7, an Oslo-based engineering firm that is also focused on oil field services and equipment.
The rise also comes as McDermott this morning comfortably beat expectations on earnings, posting $0.17 for the first quarter versus a consensus estimate from analysts polled by Zack's Investment Research of $0.11 and last year's $0.08.
McDermott rejected the bid saying it under-valued the company at $7 a share
The bid is also being seen widely as designed to undermine McDermott's and Dutch firm CB&I's agreed merger, which was proposed in December (giving McDermott's shareholders 53% of the new company, which retains its name) and which will be put to a shareholders' vote on May 2.
Though McDermott's shares are up -- currently at $7.20, up 20 cents, or 2.8% -- they are still well below their $8.98 high in January and have not recovered to pre-oil-price-crash levels above $10 in 2014. Similarly, CB&I shares have bounced back from last week's lows after Subsea 7's intervention, up about $2 on the week at $14.09, but are well below the January high near $22 and far below the $87/share pre-crash price.
Earlier this month, McDermott's board said in a statement that the CB&I merger would create "a company that spans the entire value chain from concept to commissioning," and allow it to ride cycles in different parts of their combined businesses more smoothly. For example, CB&I is strong in downstream areas, like petrochemicals, whereas McDermott is focused on oil production.
(First Oil reports are produced by MT Newswires' global team of oil reporters. This story is also disseminated in real time to energy industry professionals via the First Oil Chat service on the ICE Instant Message application.)