April 23 (UPI) -- U.S. oilfield services company McDermott International was quick to reject an offer tabled Monday in an unsolicited bid by from Norwegian rival Subsea 7.
"McDermott's board of directors carefully reviewed and considered the proposal in consultation with its outside financial advisors and legal counsel," it said in a statement Monday. "The board concluded that the proposal was not in the best interests of the Company or its stockholders as it significantly undervalued McDermott and was not an attractive alternative to the proposed combination with Chicago Bridge & Iron."
Norwegian offshore services company Subsea 7 announced Monday it made a $2 billion unsolicited bid to take over McDermott, saying it would counter with higher offers if necessary. McDermott, however, would have to end its bid with CB&I.
"We see significant merit in such a transaction for all shareholders, and with our financial and legal advisors continue to be open to discussions," Jean Cahuzac, Subsea 7's chief executive officer, said in an earlier statement.
Last week, David Dickson, McDermott's CEO, said it was logical for his company to team up with CB&I as it would diversify his company's client base. All of McDermott's shareholders were called on to vote for the merger.
McDermott is working on a $6 billion merger with engineering firm CB&I. Both signed contracts for work in Saudi Arabia and the merger proposal in December followed the $4.5 billion in agreements signed between the Saudi Arabian Oil Co., known informally as Saudi Aramco, and a handful of service contractors for "megaprojects" envisioned in the energy-rich kingdom.
The proposal from Subsea 7, meanwhile, is the latest in a steady string of mergers for companies that provide services for the upstream, or exploration and production, side of the energy sector. Subsea 7 and Schlumberger, the largest services firm in the world, formed a joint venture partnership in February that was based on a 2015 arrangement to coordinate broad offshore development work under one umbrella.
Schlumberger last week reported first quarter earnings of $7.8 billion were up 14 percent from the same period last year, but down 4 percent from the fourth quarter.