Do Chicago Bridge Insiders Know Something You Don't?
Chicago Bridge & Iron Co. (NYSE:CBI) announced on Monday, July 30, that it plans to buy Shaw Group Inc. for $3 billion in cash and stock, creating a huge engineering and construction firm, Reuters reports.
However, the company's shares fell on the announcement, indicating investors may worry the deal is far from closing. What's more, company insiders have been selling millions of dollars in stock in recent weeks, casting further doubt that the proposed merger could be beneficial for the construction company.
According to Reuters, the deal will increase CB&I's debt load and also take it away from oil and gas - its area of expertise - all the while making earnings less certain.
"You're seeing an adverse reaction from CB&I shareholders to the deal," said energy infrastructure analyst Robert Norfleet of BB&T Capital Markets. "They feel like this came completely out of left field.This is more of a transformational acquisition, not a bolt-on acquisition, (which) management had indicated."
In the last three months, company officials have made $3.24 million in insider transactions, with shares valued at $35.05.
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