The Shaw Group Inc. announced it has entered into a definitive agreement to sell substantially all of its energy and chemicals business for about $300 million to Technip, a Paris-based offshore oil and gas exploration firm.
The Energy and Chemicals Group has been a source of economic losses for Shaw, an international construction and engineering firm with headquarters in Baton Rouge. During a second-quarter earnings conference call with analysts at the end of March, Shaw officials announced they expected to name a buyer for the energy and chemicals group in the third quarter.
Shaw will retain Energy and Chemicals Group personnel in its Baton Rouge office, which will be integrated into the company’s Plant Services Division, as well as Shaw Consulting International Inc., which will be incorporated into Shaw’s Environmental and Infrastructure Group, the company reported in a press release Monday.
Shaw also will retain its Toronto-based operations and is reviewing options regarding future plans for that office. Additionally, Shaw will maintain its obligations under an engineering, procurement and construction contract associated with a large ethylene plant in southeast Asia that is now about 98 percent complete.
The announcement Monday increased anticipated earnings-per-share for fiscal year 2012 from $2.20 to $2.30. The sale is targeted to be complete in Shaw’s fourth fiscal quarter. Shaw’s stock closed at $27.57 Monday, up 11 cents.
Shaw and Technip also have agreed to work toward developing future business relationships involving Shaw’s core business units.
“We believe this divestiture creates the greatest value for our shareholders, while allowing Shaw to pursue additional opportunities for growth in the primary industries we serve,” J.M. Bernhard Jr., Shaw’s chairman, president and chief executive officer, said in a statement. “Shaw will continue to focus our efforts on growing our leadership positions in our core business lines and ensuring excellence and consistency across all operations.”
Shaw expects to recognize a net pre-tax gain of about $15 million, or $10 million after tax. The net gain also includes total charges of about $75 million pre-tax, which includes potential restructuring related to the businesses being retained, retention of the ethylene contract, transaction costs and other miscellaneous items. On a pre-tax basis, Shaw currently estimates this process will result in a charge of $43 million in the third quarter of fiscal year 2012, a gain of $66 million in the fourth quarter of fiscal year 2012, and a charge of $8 million in fiscal year 2013. The timing and final amounts of the gain and related charges are dependent upon the closing of the transaction and the completion of potential restructuring and contract obligations.
Technip employs about 30,000 workers in 48 countries and operates a fleet of specialized vessels for pipeline installation and subsea construction.