Engineering and construction groups CB&I and McDermott International have agreed to merge in an estimated $6 billion all-stock transaction, creating a vertically integrated onshore-offshore company.

McDermott shareholders will own 53% of the combined company and CB&I shareholders the rest. David Dickson, CEO of McDermott, will head the new company, which will also retain McDermott's headquarters in Houston, Texas, USA.

"Together, we will have a broadened reach across the entire energy industry that addresses evolving customer needs, along with a much stronger and more flexible financial profile than CB&I would independently," said CB&I CEO Patrick Mullen, who will remain with the company through a transition period.

The combination unites McDermott's established presence in the Middle East and Asia with CB&I's operations in the US. McDermott said that by retaining CB&I's technology business, with its 3,000 patents and patent application trademarks and more than 100 licensed technologies, the combined company will be one of the world's largest providers of licensed process technologies.

The deal has been approved by the boards of both companies and is expected to close in the second quarter of 2018, subject to the usual closing conditions as well as shareholder and regulatory approvals.

The combined operations will have revenues of about $10 billion and a backlog of work totaling about $14.5 billion. Annualized cost savings of $250 million are anticipated in 2019, which is in addition to the $100 million cost reduction program that CB&I expects to have fully implemented by the end of this year.

Cost synergies are expected to come from operations and supply chain optimization, general and administrative savings and other related cost savings. Both companies also expect the transaction to lead to substantial revenue synergies. Excluding one-time costs, the deal is expected to be cash accretive within the first year after closing.