CB&I to Sell Technology Business
US engineering contractor CB&I is putting its technology business up for sale as it struggles with falling revenues. The Texas-headquartered group reported a second-quarter loss of $425 million and revenues down more than 40% year over year.
“Although our second-quarter results are disappointing, we are taking decisive actions to improve our operating performance and strengthen the company’s financial position,” said president and CEO, Patrick Mullen. “We have initiated a comprehensive cost reduction program and suspended our dividend. Additionally, we are pursuing a sale of our technology business, which we believe will unlock significant value for stakeholders.”
Mullen said proceeds from the sale will be used to wipe out most of CB&I’s debt and reinvest in its engineering & construction and fabrication services businesses. “We envision a bright future for CB&I as a highly focused company with tightly integrated EPC [engineering, procurement and construction] and fabrication capabilities serving the LNG, petrochemical, refining and gas power generation markets.”
The technology business includes about 3,000 patents and patent application trademarks and more than 100 licensed technologies. CB&I is aiming to close the deal by the end of 2017. Mullen said the business consistently generates very attractive margins with minimal capital requirements, but was undervalued as part of CB&I. “Our intent is to negotiate a long-term strategic alliance with the ultimate buyer, which we believe could benefit both CB&I and the buyer,” he said.
In June, CB&I sold its capital services business to an affiliate of private equity firm Veritas Capital for $700 million. The contractor also sold its Stone & Webster nuclear construction business, which it acquired in 2012 as part of its $3 billion acquisition of The Shaw Group, to Westinghouse Electric for $229 million at the end of 2015.
