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Alternative Market Briefing

Denali Investors sends a letter to Shaw Group demanding fair value over acquisition deal

Thursday, August 16, 2012

Bailey McCann, Opalesque New York: Activist hedge fund, Denali Investors has sent a letter to US-based nuclear power company The Shaw Group saying that the planned acquisition by US-based firm CB&I is not offering a fair value to shareholders. In it, Denali principal, H. Kevin Byun, argues that temporary, "optical" issues are placing false downward pressure on Shaw stock and that the Shaw board is leaving money on the table by not demanding a greater premium. The letter follows another sent to Shaw last year which implored Shaw CEO James M. Bernhard, Jr. to take a more robust approach to creating shareholder and company value.

In all, the CB&I acquisition will total approximately $3bn and create one of the nation's largest energy players. According to energy trade, Environment Analyst, the deal has been unanimously approved by boards at both companies and is expected to be complete by 2013. Under the terms of the deal, Shaw shareholders will receive approximately $46 per share, a figure which Denali argues is well below Shaw's potentia......................

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