Global Industries M&A, Some Will Want More (GLBL)

Global Industries Ltd. (NASDAQ: GLBL) is surging on news of a more than 50% buyout premium this morning.  The offshore construction, engineering, project management and support services outfit has entered into a definitive merger agreement with Technip in a cash merger valued at $8.00 per share, or about $1.07 billion in enterprise value between stock and net debt after cash.  It is actually a 55% premium to Friday’s close and represents a 92% premium to the average closing share price for the 30 trading days ending on September 9, 2011.

The high-premium deal sounds great on the surface, particularly considering that Global Industries has seen its shares slide so much from the energy peak of recent years.  The problem is that this is going to leave many longer-term shareholders facing forced losses.  Some holders are likely to demand a higher price.

The deal is expected to close in early 2012 if shareholder approval comes.  The deal brings Global’s 14 vessels and important geographic positions in the Gulf of Mexico, AsiaPacific, and in the Middle East.

Where trouble is going to arise is that the 52-week trading range is $3.09 to $10.23.  Even the 55% premium at $8.00 is going to leave at least some shareholders in the lurch.  If you go back to the energy cycle peak of 2007 into 2008, the price was much higher above $15, then above $20, and then above $25 at the true peak.  Global was also a $15 and $20 stock in the early part of last decade and even in the 1990s.  No dividend has been paid to holders in that entire time either.

Realistically, there may not be one-penny more to pay above $8.00.  It may be an incredibly fair and generous offer.  Still, some shareholders get caught as being “long and wrong” and that will almost certainly have been the case for some investors.

This is an obvious case where some are going to want more.  Whether or not they can get it is another issue.  Global shares are currently up 51% at $7.78 and there has been a whopping 36 million shares in less than two hours of trading.

JON C. OGG