McDermott (MDR) Stock Rockets On Strategic Exploration

McDermott International MDR Stock News

McDermott International Inc (NYSE: MDR) is rocketing in the market this morning, trading on gains of around 50% after announcing that it plans on exploring strategic alternatives. Here’s the scoop:

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MDR Stock Soars On Strategic Exploration

In a press release issued early this morning, McDermott International said that it is reviewing strategic alternatives. In the release, the company said that it has received multiple unsolicited approaches to acquire all or part of Lummus Technology.

Lummus Technology is the company’s technology arm, with acquisition offers value at more than two and a half billion dollars. In the release, the company said that due to these offers, it is in the process of exporing strategic opportunities.

MDR said that the exploration will take place with the goal of unlocking the value of Lummus Technology while maintaining the strategic rationale of engineering, procurement and construction (EPC) pull-through.

The value of the company’s subsidiary includes consideration of it being a leading licensor of proprietary petrochemicals, refining, gasification and gas processing technologies. The company also supplies proprietary catalysts and related engineering.

The company has a long history, spanning more than a century. Today, it holds about 3,100 patents and patent appications and one of the most diversified technology portfolioes in the hydrocarbon processing sector.

In a statement, David Dickson, President and CEO at MDR, had the following to offer:

Lummus is an excellent business, with incredibly impressive employees, that has earned a reputation for expertise, innovation and reliability in the refining and petrochemical industries. The process of exploring strategic alternatives is part of our ongoing efforts intended to improve McDermott’s capital structure, and we plan to use the proceeds from any transaction involving Lummus Technology to strengthen our balance sheet. While Lummus is an important business within McDermott, we have decided to undertake a process to fully realize its strategic and financial value.

Why Investors Are So Excited

MDR has been a source of pain for investors as of late. In the past year, the stock has fallen from over $19 per share to under $3 per share.

Now, it’s important for the company to do something to show its value, and return some of that value to investors. The offers to purchase Lummus Technologies validate the overall value of the company’s subsidiary, and acceptance of these offers would lead to an immediate return of value for investors.

While there is still plenty of work that can be done, with or without a deal being made here, the news shows that MDR is working toward providing its investors with the value that they deserve.

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