CB&I completed its acquisition of The Shaw Group Inc. on Wednesday, a move that means Baton Rouge will no longer be headquarters for a Fortune 500 company and that Louisiana only has two left.
The remaining companies atop the Fortune magazine list of top companies by revenue are Entergy Corp. in New Orleans, at 239, and CenturyLink in Monroe, at 171. Shaw was 412 on the latest list.
CB&I and Shaw shareholders overwhelmingly approved the $3 billion merger in December. The combined company has more than $11 billion in annual revenue and a backlog of work exceeding $28 billion.
“With the close of the transaction, CB&I is the most complete energy infrastructure-focused company in the world,” Philip K. Asherman, president and CEO of CB&I, said in a news release. “Through our now 50,000 talented employees, we have the capabilities and the expertise to provide our clients with a world of solutions, and a tremendous strategic advantage in responding to the growing demand for energy infrastructure around the globe.”
CB&I will operate Shaw as a separate business unit under the name CB&I Shaw. Headquarters functions at the company’s Baton Rouge offices have shifted to The Woodlands, Texas, where CB&I is based.
By lunchtime Wednesday, workers were removing the Shaw sign from the 12-story office building on Essen Lane that had been the headquarters.
While there has been speculation the acquisition would cause some high-ranking Shaw officials to be moved to Texas, Gentry Brann, a spokeswoman for CB&I Shaw, said no one from the Baton Rouge office has been moved.
“The plan is to continue running our business units from this location,” Brann said in an email.
On Wednesday, CB&I announced that Luke V. Scorsone, who had worked for the company since 2001, had been promoted to executive vice president and group president of fabrication services, and will be based out of Baton Rouge.
CB&I engineers and builds some of the world’s largest infrastructure projects. CB&I has about 23,000 employees worldwide.
Shaw is an engineering, construction and fabrication company with about 27,000 workers worldwide. Of those, 4,000 are in Louisiana, with about 1,000 in Baton Rouge.
CB&I has consistently told local economic development officials that it sees Baton Rouge as a center for engineering talent, said Adam Knapp, president and CEO of the Baton Rouge Area Chamber.
“They’ve said the staffing here will remain the same size, if not larger,” Knapp said. “There’s a potential for growth.”
Stephen Moret, Louisiana’s economic development secretary, said in an email that he has had several “encouraging” discussions with senior CB&I officials, including Asherman.
“Now that the transaction is complete, we will have an opportunity to discuss growth opportunities for CB&I in Louisiana in greater detail,” Moret said.
Analysts at first were “fairly negative” about CB&I’s plans to purchase Shaw, said Randy Bhatia, who follows both companies for Capital One Southcoast in Houston. “A lot of people thought they were overpaying for a company that did not fit in with their strategic vision,” Bhatia said.
But upon further examination, the deal started to look better, he said.
Shaw sold its stake in Westinghouse Electric Co. in September, a move that cleared $1.7 billion in debt from its books. And the company sold off its Energy and Chemicals business in August, shedding another unit that had been a drag on its earnings.
That left Shaw with four business units, three of which are in excellent shape, Bhatia said. The Fabrication and Manufacturing business, which builds piping and steel for power and petrochemical plants, is the “crown jewel.”
“They’re the market leader in a very good market right now,” he said.
Plant Services is also a strong business unit, because of stricter nuclear regulations coming down the road because of the Fukushima nuclear disaster that happened in 2011 after a devastating earthquake and tsunami in Japan.
“That’s a good business, because there are high barriers to entry because you need such exceptionally skilled people,” Bhatia said.
The Environment and Infrastructure group, which works for private and public sector clients, is stable, he said.
Shaw’s Power group is in “decent” shape, mainly because the market for smokestack scrubbers is a little slower than anticipated, Bhatia said. But the power plant business was something that CB&I had no presence in, he said.
Editor’s Note:This story was changed Feb. 14, 2013, to correctly say Randy Bhatia, of Capital One Southcoast, is in Houston.