McDermott International gets takeover interest for its Lummus Technology unit

Reuters

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20 September 2019 11:40

(Reuters) - McDermott International Inc (MDR.N) said on Friday it received takeover interests for the acquisition of all or part of its technology business Lummus, that could value the unit at over $2.5 billion.

McDermott’s shares up about 70% in premarket trading.

The oilfield services company said it is now exploring strategic options for the unit, which provides technology to petrochemicals, refining, and gas processing markets among others.

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.

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McDermott’s shares have plunged about 84% since the company lowered its full year outlook in July, saying it expected full year revenues of about $10 billion.

The Houston, Texas-based company had a long-term debt of $3.39 billion as of June 30.

McDermott, which has retained Evercore as the lead adviser, said proceeds from any deal will be used to strengthen the company’s balance sheet.

Separately, the company said its previously announced processes to sell the remaining portion of its pipe fabrication business and its industrial storage tank business are ongoing.

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