Shaw Bought By Chicago Bridge, Shares Jump 70%

The Shaw Group

, a Fortune 500 company based out of Baton Rouge, has been bought by The Chicago Bridge & Iron Company

. The price is $41 a share, with a further $5 equity per share. Upon hearing the news, markets quickly reacted as Shaw traded up around 70 percent pre-market, sometimes going above $46 a share. The Shaw Group is a vertically-integrated business involved in a variety of services. Power production has been one of the better performers for Shaw recently, with a new 585-megawatt clean-coal plant coming online in Virginia earlier this month, and multiple nuclear power plants in the planning stages. Shaw's energy and chemical division had been operating at a loss, and had been slated for sale in the fourth quarter to Technip for $300 million. It appears the French company has been outdone by Netherlands-based Chicago Bridge & Iron. While official word hasn't yet been handed down, it certainly seems that Chicago Bridge and Iron wants Shaw's chemical division along with the rest of the company – especially considering Chicago Bridge's work in the refinery field. With a slew of recent contracts around the globe, Chicago Bridge & Iron had the money to spend on the Shaw buyout. An oil sands expansion project in Alberta, Canada worth $300 million, a $225 million project working on the Newcastle Gas Storage Facility in Australia, and a technology contract with Petronas, for work in Malaysia, have all been announced in just the past month. With more than enough money coming in, now was the time to grab Shaw if Chicago Bridge & Iron wanted to keep the company and its technologies out of the hands of competitors. That said, this deal may not be the last we hear of Shaw. Given the immediate reponse of share prices to meet or exceed Chicago Bridge's offer price, Shaw may wind up in the middle of a bidding war. The next move is up to Technip, assuming they haven't reached an agreement with Chicago Bridge already. Even if Technip is satisfied, there may be other interested parties now that the sharks have gathered round a single company. While Chicago Bridge and Iron remains the frontrunner and likely purchaser, don't be terribly surprised if the asking price increases before we're through. Chicago Bridge & Iron traded down about 7.86 percent pre-market while Shaw Group traded up 65 percent.