McDermott International has announced plans to divest its storage tank business and U.S. pipe fabrication business. The company has completed a comprehensive strategic review of its portfolio as part of the integration process resulting from its combination with CB&I earlier this year, reaffirming its commitment to McDermott’s core capabilities as a vertically integrated provider of technology-led onshore and offshore EPC/EPCI services.

As a result of the review, it was determined that the company’s storage tank business and its U.S. pipe fabrication business are not core to the company’s long-term strategic objectives as a vertically integrated supplier with strong pull-through from technology. In particular, McDermott has determined that these operations offer limited pull-through or cross-selling opportunities and, in some cases, their ability to pursue third-party work aggressively can be hampered by internal considerations. As a result, McDermott is developing plans to seek buyers for each of the two businesses. 

The two businesses, which McDermott expects to sell separately, had combined 2017 revenues of approximately $1.5bn, 2017 backlog of approximately $1.4bn and approximately 5,350 employees.

McDermott anticipates proceeds in excess of $1bn and is targeting completion of the transactions during 2019. It expects to use a majority of the proceeds to reduce the debt under its $2.25bn term loan.

McDermott will retain its fabrication yards that fit the company’s vertically integrated model with their ability to deliver fully modularised and complete facilities for offshore and onshore projects, located in Altamira, Mexico; Batam Island, Indonesia; Jebel Ali, Dubai; Dammam, Saudi Arabia; and Qingdao, China.

For more information visit: www.mcdermott.com

31st October 2018