Cal Dive International to Buy Horizon Offshore for 1.15 Times Revenue

Weekly Corporate Growth Report, Jun 18, 2007

The Deal: Cal Dive International Inc. has agreed to purchase Horizon Offshore Inc. Under the terms of the agreement, each share of Horizon will be exchanged for $9.25 in cash and 0.625 shares of Cai Dive common stock. Based on recent Cal Dive prices, the deal values Horizon at $19.25 per share, a premium of about 14 percent over Horizon's share price prior to the deal announcement. The companies expect the transaction to close in the third quarter of 2007.

Discussion: Horizon Offshore provides offshore marine construction services to the oil and natural gas industry. The company operates a fleet of nine vessels, including derricktowing barges, pipelaying vessels, and a diving support ship. Horizon installs undersea pipelines and constructs production platforms.

Cai Dive International installs and maintains offshore platforms and pipelines in the Gulf of Mexico, the Middle East, Southeast Asia, and Trinidad. The company operates a fleet of 23 surface and saturation diving support vessels. CaI Dive filed an initial public offering in 2006.

The combined company will have revenues of $ 1 . 1 billion, more than 2,000 employees, and about 35 barges and ships. The merger will allow Cai Dive to pursue larger projects. The combined company will be able to perform a complete platform salvage job. Currently each company only performs a portion of the job.