McDermott International Inc said on Friday it received takeover interests for all or part of its technology business that could value the unit at over $2.5 billion, sending its shares up about 66% in morning trade.
The oilfield services company said it is now exploring strategic options for the unit, Lummus, which provides technology to petrochemicals, refining, and gas processing markets among others.
Zephirin Group analyst Lenny Zephirin said the offer is “salivating” and, if accepted, should allow the company to reduce leverage by about $1.2 billion.
The Houston, Texas-based company had long-term debt of $3.39 billion as of June 30.
Oilfield services companies have faced significant pressure and margin compression as North American oilfield activity has slowed, as customers have tightened spending to focus on shareholder return.
The company’s shares fell nearly 70% on Wednesday on media reports that the oil-gas firm had hired turnaround consulting firm AlixPartners LLP.
McDermott also said on Friday it has retained Evercore as the lead adviser, and proceeds from any deal will be used to strengthen the company’s balance sheet.
Credit Suisse analysts, who called the unit “crown jewel” of the company and its last resort, said the valuation is reasonable given historic transactions in the space, and said the deal could happen in early 2020.
McDermott said its previously announced processes to sell the remaining portion of its pipe fabrication business and its industrial storage tank business are ongoing.
Source: Reuters.com