London-based offshore oil services firm Subsea 7 has made a hostile takeover bid for U.S. rival McDermott worth about  $2 billion, that would scuttle the latter firm's estimated $1.86-billion deal to merge with engineering firm Chicago Bridge & Iron (CB&I), in play since December.

Subsea 7 noted, however, that McDermott’s board rejected its proposal on April 20 but also said the Houston-based company could receive a higher bid if it agreed to talks, according to a Reuters report on April 23.

Subsea 7's proposed bid for McDermott is a 16% share-price premium relative to its April 20 close. It would be an all-cash transaction or a 50-50 cash and stock deal.

"Our initial thoughts are that a combination with Subsea 7 does not better position [McDermott] meaningfully longer term," said Jamie Cook, lead industry analyst at Credit Suisse, in an April 23 note. "While the deal with Subsea 7 would offer geographic diversification, the CBI deal, and assuming that [McDermott]  can manage the risk effectively, provides greater longer term benefits and is a more transformational deal." 

She said the link with CBI "would offer diversification across energy given onshore and technology platforms and strong growth prospects, in particular across LNG and petrochemical."

With the Subsea 7 bid, Cook said the May 2 vote by McDermott shareholders for the proposed merger with CBI "will be increasingly important."