SHAW GROUP INC
424B2, 1998-09-09
MISCELLANEOUS FABRICATED METAL PRODUCTS
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                                 645,000 Shares

                                     [LOGO]
                               The Shaw Group Inc.

                                  Common Stock

                                  ____________


               The 645,000  shares of common  stock,  no par value (the  "Common
          Stock")  of The Shaw  Group Inc.  ("Shaw"  or the  "Company")  offered
          hereby  may be sold from time to time by certain  stockholders  of the
          Company described herein (the "Selling  Stockholders") in transactions
          on  the  New  York  Stock  Exchange  (the  "NYSE"),  otherwise  in the
          over-the-counter market or otherwise at prices and at terms prevailing
          at the time of sale,  at prices  related  to the then  current  market
          price or in negotiated transactions.  The Company will not receive any
          of the  proceeds  from the sale of the  shares of Common  Stock by the
          Selling  Stockholders.  All of the shares of the Common Stock owned by
          the Selling  Stockholders have been "restricted  securities" under the
          Securities Act of 1933, as amended (the  "Securities  Act"),  prior to
          their registration hereunder.

               In transactions effective as of July 28, 1998, the Company issued
          an  aggregate  of 645,000  shares of the Common  Stock to the  Selling
          Stockholders  for all of the  outstanding  capital  stock  of  Bagwell
          Brothers,  Inc. and Eagle  Industries,  Inc.  Pursuant to an agreement
          between the Company and the Selling  Stockholders,  the Company agreed
          to prepare and file a shelf  registration  statement  on Form S-3 with
          the Securities and Exchange  Commission (the "Commission") to register
          the  offering  of the  shares of Common  Stock  covered  hereby.  This
          Prospectus  has been prepared for use in connection  with future sales
          of the shares of Common  Stock by the Selling  Stockholders  under the
          shelf  registration  statement  on  Form  S-3.  For  more  information
          concerning the Selling  Stockholders and related matters, see "Selling
          Stockholders and Plan of Distribution." The shares of Common Stock may
          be sold from time to time by the Selling Stockholders pursuant to this
          Prospectus   or  in   transactions   exempt   from  the   registration
          requirements of the Securities Act. In connection with any sales,  the
          Selling  Stockholders and any brokers  participating in such sales may
          be deemed to be  "underwriters"  within the meaning of the  Securities
          Act. See "Selling Stockholders and Plan of Distribution".  Outstanding
          shares of Common Stock of the Company are listed on the NYSE under the
          symbol "SGR".

               See "Risk  Factors"  for a  discussion  of certain  factors  that
          should be  considered  by  prospective  purchasers of the Common Stock
          offered hereby.

          THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
      SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
     NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
       COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
            ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
                                    
               The date of this Prospectus is September 4, 1998.

<PAGE>


               THE  ATTORNEY  GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED ON
          OR ENDORSED THE MERITS OF THIS  OFFERING.  ANY  REPRESENTATION  TO THE
          CONTRARY IS UNLAWFUL.


                 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     The following documents are incorporated herein by reference:

     (a) The  Company's  Annual  Report on Form 10-K for the  fiscal  year ended
August 31, 1997;

     (b) The  Company's  Quarterly  Report  on Form 10-Q for the  quarter  ended
November 30, 1997;

     (c) The  Company's  Quarterly  Report  on Form 10-Q for the  quarter  ended
February 28, 1998;

     (d) The Company's  Quarterly  Report on Form 10-Q for the quarter ended May
31, 1998;

     (e) The Company's  Proxy  Statement  dated  December 22, 1997 in connection
with the Company's Annual Meeting of Shareholders held on January 23, 1998; and

     (f)  The  description  of  the  Company's  Common  Stock  contained  in the
Company's  Registration  Statement  on Form 8-A  (including  any  amendments  or
reports filed for the purpose of updating such description).

     All documents filed by the Company with the Commission pursuant to Sections
13(a),  13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Common Stock pursuant hereto
shall be deemed to be  incorporated  by reference in this Prospectus and to be a
part  hereof  from the  date of the  filing  of such  documents.  Any  statement
contained  in this  Prospectus  or in a  document  incorporated  or deemed to be
incorporated by reference in this  Prospectus  shall be deemed to be modified or
superseded  for  purposes  of this  Prospectus  to the extent  that a  statement
contained in this  Prospectus or in any other  subsequently  filed document that
also  is or is  deemed  to be  incorporated  by  reference  herein  modifies  or
supersedes  such statement.  Any such statement so modified or superseded  shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.

     The Company  undertakes to provide  without charge to each person to whom a
copy of this Prospectus has been delivered,  upon the written or oral request of
any such person, a copy of any or all of the documents incorporated by reference
herein,  other than the  exhibits to such  documents,  unless such  exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates. Written or oral requests for such copies should be directed to the
Company's  executive  offices at 11100 Mead Road,  Second  Floor,  Baton  Rouge,
Louisiana 70816, Attention: Secretary (telephone number: (504) 296-1140).

                              AVAILABLE INFORMATION

     The Company is subject to the informational  requirements of the Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act"),  and, in  accordance
therewith,  files  reports,  proxy  statements  and other  information  with the
Securities  and Exchange  Commission  (the  "Commission").  Such reports,  proxy
statements and other information filed by the Company with the Commission can be
inspected  at the  Public  Reference  Section  of the  Commission  at Room 1024,
Judiciary  Plaza,  450 Fifth  Street,  N.W.,  Washington,  D.C.  20549,  and the
Regional Offices of the Commission at Citicorp Center,  500 West Madison Street,
Suite 1400, Chicago,  Illinois  60661-2511,  and 7 World Trade Center, New York,
New York 10048.  Copies of such  material  can also be obtained  from the Public
Reference  Section of the Commission at Room 1024,  Judiciary  Plaza,  450 Fifth
Street,  N.W.,  Washington,  D.C.  20549,  at prescribed  rates.  The Commission
maintains  a World  Wide Web site on the  Internet  at  http://www.sec.gov  that
contains  reports,  proxy  and  information  statements  and  other  information

                                       2
<PAGE>

regarding  registrants  that  file  electronically  with  the  Commission.  Such
reports,  proxy and information  statements and other information concerning the
Company can also be  inspected  and copied at the offices of the NYSE,  20 Broad
Street, New York, New York 10005.

     The Company has filed with the Commission a Registration  Statement on Form
S-3 under the  Securities  Act with respect to the Common Stock offered  hereby.
This Prospectus,  which constitutes a part of the Registration  Statement,  does
not  contain all of the  information  set forth in the  Registration  Statement,
certain items of which are contained in exhibits to the  Registration  Statement
as  permitted  by the rules  and  regulations  of the  Commission.  For  further
information  with  respect to the Company and the Common Stock  offered  hereby,
reference is made to the Registration Statement, including the exhibits thereto.
Statements  made in this  Prospectus  concerning  the  contents of any  document
referred  to herein  are not  necessarily  complete.  With  respect to each such
document filed with the Commission as an exhibit to the Registration  Statement,
the  material  terms of each such  document  are set  forth in this  Prospectus.
However, reference is made to the exhibit for a more complete description of the
matter  involved,  and each  such  statement  shall be deemed  qualified  in its
entirety by such reference.

                 FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISK

     This  Prospectus,  including  the  information  incorporated  by reference,
contains  forward-looking  statements  within the  meaning of Section 27A of the
Securities  Act and  Section  21E of the  Exchange  Act.  These  forward-looking
statements are based largely on the Company's  expectations and are subject to a
number of risks and  uncertainties,  certain of which are  beyond the  Company's
control.  Actual  results  could differ  materially  from these  forward-looking
statements as a result of the factors  described in this  Prospectus  including,
but not  limited  to,  (i)  adverse  economic  conditions;  (ii) the  impact  of
competitive  products and pricing;  (iii) product demand and  acceptance  risks;
(iv) the presence of competitors with greater financial resources; (v) costs and
financing  difficulties;  and (vi)  delays or  difficulties  in the  production,
delivery or installation  of products,  including a lengthy strike or other work
stoppage by the Company's  union  employees at any of the Company's  facilities.
See "Risk Factors." In light of these risks and  uncertainties,  there can be no
assurance  that  actual  results  will be as  projected  in the  forward-looking
statements.

                                   THE COMPANY

     Shaw  is  a  leading   supplier  of  industrial   piping  systems  for  new
construction  and retrofit  projects  throughout  the world,  primarily  for the
electric power, refining and chemical industries. Shaw is committed to being the
"total piping resource" for its customers by offering  comprehensive  design and
engineering  services,  piping system fabrication,  construction and maintenance
services,  manufacturing  and sale of  specialty  pipe  fittings  and design and
fabrication of pipe support systems.

     The  Company  was founded in 1987 by current  management  and  subsequently
purchased the assets of Benjamin F. Shaw Company, a century-old pipe fabricator.
The Company has increased its revenues from $29.3 million in fiscal 1988 to $338
million  in  fiscal  1997,   increasing  both  its  domestic  and  international
businesses. Through internal expansion and a series of acquisitions, the Company
has expanded its fabrication  capacity,  increased its bending  capabilities and
broadened its piping system products and services.

     The Company's  principal  executive offices are located at 11100 Mead Road,
Baton Rouge, Louisiana 70816, telephone: (504) 296-1140.

                                  RISK FACTORS

     Prospective  purchasers of the Common Stock offered hereby should carefully
consider the following  risk factors,  together  with the  information  provided
elsewhere  in  this  Prospectus  (or  incorporated  herein  by  reference),   in
evaluating an investment in the Common Stock.


                                        3


<PAGE>

Cyclicality of Customer Projects

     The demand for the Company's products and services depends primarily on the
existence of construction  and retrofit  projects,  particularly in the electric
power,  refining and chemical  industries.  These industries  historically  have
been,  and will likely  continue to be,  cyclical  in nature and  vulnerable  to
general  downturns in the economy.  The Company's results of operations may vary
depending on the availability of future projects from such industries.

Dependence on Major Customers

     Projects in the electric power, refining and chemical industries frequently
involve a lengthy and complex bidding and selection process,  and the ability of
the Company to obtain  future  contracts  is  difficult  to  predict.  Because a
significant portion of the Company's sales is generated from large projects, its
results  of  operations  can  fluctuate   from  quarter  to  quarter.   While  a
concentration  of  customers  has been  historically  prevalent,  because of the
nature of the Company's business,  the significant customers vary between years.
For the year ended August 31, 1997, no one customer had sales to them  exceeding
10% of sales.

Raw Materials and Suppliers

     The Company's principal raw materials are carbon steel, stainless and other
alloy  piping,  which it obtains from a number of domestic  and foreign  primary
steel producers.  The Company  believes that it is not generally  dependent upon
any one of its  suppliers  for raw  materials,  that  the  market  is  extremely
competitive and that its relationship with its suppliers is good.  Certain types
of raw  materials,  however,  are available  from only one or a few  specialized
suppliers.  Although the Company has not experienced  any  significant  sourcing
problems to date,  there can be no assurance  that  sourcing  problems  will not
occur in the future.  To the extent  that a sourcing  problem  does  occur,  the
Company's  ability to complete a project in a timely  fashion or at a profit may
be jeopardized  and  ultimately  result in a loss.  Furthermore,  because of the
volume of piping  materials  purchased,  the Company is often able to  negotiate
advantageous  purchase prices therefor. As a result, if a manufacturer is unable
to deliver the materials  pursuant to the negotiated  terms,  the Company may be
required to purchase the materials from another source at a higher price,  which
may reduce the profit to be realized  or possibly  result in a loss on a project
for which such materials were needed.

Potential for Product Liability and Warranty Claims

     Certain  of the  Company's  products  are  used  in  potentially  hazardous
environments, including without limitation, nuclear facilities. Any catastrophic
occurrences  in excess of  insurance  limits at  locations  where the  Company's
products are used could in the future result in  significant  product  liability
claims against the Company. In addition,  the Company,  under certain contracts,
must use new metals or  processes  for  producing  or  fabricating  pipe for its
customers,  and the  failure of any such  metals or  processes  could  result in
warranty  claims  for  significant  replacement  or  reworking  costs on Company
projects.

Risks Associated with Competition

     The Company's  competition in the supply and  fabrication of piping systems
generally consists of a number of pipe fabricators domestically and divisions of
large industrial  firms in the  international  sector.  Some of the competitors,
especially  in the  international  sector,  have  greater  financial  and  other
resources than the Company.

     Risks  Associated  with Growth of Core Business and Integration of Acquired
Businesses

     In the past few years,  the  Company  has  experienced  substantial  growth
through internal  expansion and acquisitions,  and the Company plans to continue
to grow in this  manner.  This  growth,  and  the  resulting  need to  integrate
acquired companies into the Company's  operations  economically and efficiently,
has required, and will continue to require, significant management,  production,
technical,  financial  and other  resources.  Due to a  substantial  increase in
sales,  the Company has  experienced,  and is continuing to experience,  billing
delays.  There can be no assurance  that the Company will be able to manage this

                                       4
<PAGE>

growth  effectively or to integrate fully the operations of any acquired company
into the Company,  and failure to do so could have a material  adverse effect on
the Company's results of operations or financial condition, or both.

     Risks Associated with  International  Contracts,  Operations and Expansion;
Foreign Exchange Risk

     To date, a  substantial  portion of the  Company's  sales and earnings have
been attributable to its sales to and operations in international  markets,  and
the Company expects  international sales and operations to materially contribute
to the Company's growth and earnings for the foreseeable  future. The success of
the Company's sales to, operations in and expansion into  international  markets
depends on numerous factors,  many of which are beyond its control. Such factors
include, but are not limited to, economic conditions in the foreign countries in
which the Company  operates  and in which it sells its products and services and
the lack of  well-developed  legal  systems  in certain  of such  countries.  In
addition,  international  contracts,  operations  and expansion may increase the
Company's  exposure  to certain  risks  inherent in doing  business  outside the
United States, including currency fluctuations, restrictions on the repatriation
of profits and assets,  compliance with foreign laws and standards and political
risks. The Company  attempts to minimize its foreign  exchange risks,  primarily
through  denominating  contracts in United  States  dollars or the  inclusion of
escalation  provisions  in  contracts,  or both.  The Company from time to time,
however,  enters  into  contracts  denominated  in a  foreign  currency  without
escalation provisions,  thereby subjecting itself to foreign exchange risks. The
Company  generally does not obtain insurance for or hedge against such risks. In
addition, the Company's ability to obtain international contracts is impacted by
the  relative  strength  or  weakness of the United  States  dollar  relative to
foreign currencies.

     During the last several years,  Venezuela has been  experiencing a monetary
and economic crisis. In response, the Venezuelan government imposed, among other
things,  foreign  exchange  controls  that  affected  the  Company's  ability to
repatriate  profits from the joint venture or otherwise  convert local  currency
into United States dollars. Based on Venezuela's lack of economic stability, the
Company  believes  that its  investment  in Venezuela may be at risk from future
foreign exchange and repatriation  restrictions.  There can be no assurance that
the Venezuelan operations will be profitable.

Fixed Price Contract Exposure

     On substantially all of its international projects, the Company is required
to quote on a "fixed" or "lump-sum"  price basis. To the extent that the Company
is unable to secure fixed  pricing  commitments  from its  suppliers at the time
such a contract is entered,  and  experiences  cost  increases  for materials or
labor during the performance of such a contract,  the Company's  profit for such
project could decrease,  or the Company could  experience a loss with respect to
such contract that could have a material adverse effect on the Company's results
of operations or financial condition, or both.

Control by Management

     At July 31,  1998,  the  officers  and  directors  of the  Company  and its
subsidiaries  beneficially  owned  approximately  20% of the outstanding  Common
Stock but controlled in excess of 47% of the voting power.  Consequently,  these
persons will be able to exercise  effective  control over corporate  actions and
the outcomes of matters requiring a shareholder vote,  including the election of
directors.

Voting Rights Tied to Duration of Stock Ownership; Anti-Takeover Effects

     The Company's Restated Articles of Incorporation provide that each share of
Common Stock that has been held by the same person for at least four consecutive
years is entitled to five votes on each matter to be voted upon at shareholders'
meetings,  and all shares held for less than four years are entitled to one vote
per share for each such matter. This charter provision could concentrate control
in existing shareholders of the Company, increase the difficulty of removing the
incumbent  Board of Directors or  management,  diminish  the  likelihood  that a
potential  buyer  would  make an  offer  for the  Common  Stock,  and  impede  a
transaction favorable to the interests of certain  shareholders.  Each purchaser
of shares of Common Stock  offered  hereby will be entitled to one vote for each
such share at all  shareholders'  meetings  until  such  shares  have  been,  in
accordance with the Company's  Restated Articles of Incorporation,  continuously

                                       5
<PAGE>

owned for a period of four  years,  in which case the holder will be entitled to
five  votes  for each  share  on all  matters  submitted  to  shareholders.  See
"Description of Capital Stock -- Common Stock".

Dependence on Key Management

     The success of the Company's business will be materially dependent upon the
continued  services of its  founder,  Chairman,  President  and Chief  Executive
Officer, J.M. Bernhard,  Jr., and other key officers and employees.  The loss of
Mr. Bernhard or such other key personnel due to death, disability or termination
of employment could have a material  adverse effect on the Company's  results of
operations or financial condition, or both.

Possible Work Stoppage

     Certain of the Company's  employees in the United States are represented by
the United  Association  of  Journeymen  and  Apprentices  of the  Plumbing  and
Pipefitting Industry of the United States and Canada, AFL-CIO (the "Union"). The
Company  experienced  a  Union-initiated  work  stoppage  of  five  days in 1992
relating  to  the  expiration  and  renegotiation  of  a  collective  bargaining
agreement  covering the Company's B.F. Shaw, Inc.  subsidiary in Laurens,  South
Carolina, and a strike, without material impact on production, by certain of the
Union members in February, 1997 relating to termination of collective bargaining
agreements  covering  the  Company's  facilities  in  Walker  and  Prairieville,
Louisiana.  Notwithstanding the lack of material impact on Company operations in
previous  instances,  a lengthy  strike  or other  work  stoppage  at any of the
Company's  facilities  could have a  material  adverse  effect on the  Company's
results of operations or financial condition, or both.

Risks Associated with Issuance of Preferred Stock

     The Company has available for issuance 5,000,000 shares of Preferred Stock,
no par value,  which the Board of  Directors  of the  Company is  authorized  to
issue,  in one or  more  series,  without  any  further  action  on the  part of
shareholders. In the event the Company issues a series of preferred stock in the
future that has preference  over the Common Stock with respect to the payment of
dividends and upon the  Company's  liquidation,  dissolution  or winding up, the
rights  of the  holders  of  Common  Stock  offered  hereby  could be  adversely
affected.  See "Description of Capital Stock -- Preferred  Stock".  In addition,
such an issuance  could  adversely  impact the market  price of the  outstanding
common stock.

Anti-Takeover Effects of Certain Charter and Bylaw Provisions and Louisiana Law

     Certain  provisions of the Restated  Articles of Incorporation  and Amended
and Restated By-Laws of the Company and certain  provisions of Louisiana law may
tend to deter potential unsolicited offers or other efforts to obtain control of
the Company that are not  approved by the Board of  Directors.  Such  provisions
may,  therefore,  deprive the Company's  shareholders of  opportunities  to sell
shares of Common  Stock at prices  higher than  prevailing  market  prices.  See
"Description  of Capital Stock -- Louisiana  Fair Price and Control  Acquisition
Shares",  "-- Classified Board of Directors",  "-- Advance Notice Provisions for
Certain Shareholder Actions", and "-- Super Majority Provisions".

Volatility of Stock Price

     In the past, the Company has  experienced  significant  fluctuations in the
market price of its Common  Stock,  and, in the future,  the market price of the
Common Stock may  experience  fluctuations  that are  unrelated to the operating
performance of the Company, such as market conditions generally and developments
specifically related to the industrial piping industry. Additionally, the volume
of daily trading in the Common Stock to date has been limited, and, as a result,
the sale of a  significant  number  of  shares  of  Common  Stock by one or more
shareholders  within a relatively  short time period could adversely  affect the
market price for the Common Stock.


                                       6


<PAGE>

Absence of Dividends

     The Company has not paid any  dividends on the Common  Stock and  currently
anticipates that, for the foreseeable  future, any earnings will be retained for
the development of the Company's business.  In addition,  the Company is subject
to certain  prohibitions on the payment of dividends under the terms of existing
credit facilities.

                                 USE OF PROCEEDS

     The shares of Common Stock offered  hereby are being offered by the Selling
Stockholders.  See "Selling Stockholders and Plan of Distribution".  The Company
will not receive any of the  proceeds  from the sale of the Common  Stock by the
Selling Stockholders.

                  SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION

     The 645,000 shares of Common Stock (the "Shares")  being  registered  under
the shelf  registration  statement  of which this  Prospectus  forms a part were
acquired by the Selling  Stockholders  in connection with the acquisition by the
Company  of all of the  outstanding  capital  stock of  Bagwell  Brothers,  Inc.
("BBI") and Eagle Industries,  Inc.  ("Eagle").  Of the aggregate 645,000 shares
being  registered  hereby,  63,540 shares are being held in escrow to secure the
indemnification   obligations  of  the  Selling  Stockholders  pursuant  to  the
acquisition  agreements  by which  the  shares of BBI stock  were  acquired.  In
connection with the  transactions  described above, the Company agreed to file a
registration  statement with the Commission for the Shares,  and the Company did
file such  registration  statement on  September  1, 1998.  The Shares are being
registered to facilitate  their sale under the Securities Act.  Pursuant to such
registration  statement,  the Selling  Stockholders  may choose to sell all or a
portion of the Shares from time to time in transactions reported on the NYSE, in
the over-the-counter  market or otherwise at prices and at terms then prevailing
or at  prices  related  to the  then  current  market  price,  or in  negotiated
transactions.  The table  below  reflects  the number of shares of Common  Stock
owned prior to the offering,  the number of shares being offered  hereby for the
Selling  Stockholders  account,  and the percentage of outstanding  shares to be
held by them following completion of the offering.  Although the following table
is presented on the assumption  that all of the Selling  Stockholders  will sell
all of their shares,  the Company cannot predict whether this in fact will occur
(and the Selling  Stockholders  have indicated that they do not presently intend
to sell all of their shares of Common Stock), the timing or amount of any actual
sales, or the impact thereof or the market price of the Company's  Common Stock.
In  connection  with the  acquisition  transactions,  Rodger D.  Bagwell  and P.
Coleman Bagwell entered into employment  agreements with BBI, and as of the date
of this  Prospectus,  the  employment by BBI of each of Rodger D. Bagwell and P.
Coleman Bagwell continues.

<TABLE>

===================================================================================================================================
                                             Beneficial Ownership                                        Beneficial Ownership After 
                                              Before the Offering                                            the Offering1
                                                      
                                    ------------------------------------                              ------------------------------
<CAPTION>
     Name of Selling Stockholder
                                         Shares           Percent2           Shares to be Sold       Shares            Percent2
<S>                                       <C>                  <C>              <C>                    <C>                <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Rodger D. Bagwell                         370,650              *                370,650              --                 --
- -----------------------------------------------------------------------------------------------------------------------------------
P. Coleman Bagwell                        229,450              *                229,450              --                 --
- -----------------------------------------------------------------------------------------------------------------------------------
Stephanie Bagwell Mouton                  27,250               *                 27,250              --                 --
- -----------------------------------------------------------------------------------------------------------------------------------
Billy Royce Bagwell                        17,650              *                 17,650              --                 --
===================================================================================================================================

</TABLE>

1Assumes  the Selling  Stockholders  sell all of their  shares of Common  Stock,
which  they may or may not do.  2Less  than 1%.  The  number of shares of Common
Stock outstanding as of July 31, 1998 was 13,262,866.

                                       7

<PAGE>

     The Shares owned by the Selling  Stockholders may be sold from time to time
by the Selling Stockholders, on one or more exchanges or in the over-the-counter
market,  or otherwise at prices and on terms then  prevailing  or at prices then
related to the then current  market price,  or in negotiated  transactions.  The
Shares may be sold by or through  broker-dealers in one or more of the following
transactions:  (a) block  trades in which the broker or dealer so  engaged  will
attempt to sell the Shares as agent but may position and resell a portion of the
block as principal to facilitate any  transaction,  (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its account pursuant
to the  Registration  Statement  relating  thereto,  and (c) ordinary  brokerage
transactions  and  transactions  in which the  broker  solicits  purchasers.  In
effecting  sales,  brokers and dealers engaged by the Selling  Stockholders  may
arrange for other  brokers or dealers to  participate.  Brokers or dealers  will
receive commissions or discounts from the Selling  Stockholders in amounts to be
negotiated (and, if such  broker-dealer  acts as agent for the purchaser of such
shares,  from  such  purchaser).  Broker-dealers  may  agree  with  the  Selling
Stockholders  to sell a  specified  number of Shares at a  stipulated  price per
Share,  and,  to the extent  such a  broker-dealer  is unable to do so acting as
agent for a Selling Stockholders,  to purchase as principal any unsold shares at
the price  required  to fulfill  the  broker-deale  commitment  to such  Selling
Stockholder.  Broker-dealers  who acquire  Shares as  principal  may  thereafter
resell such Shares from time to time in transactions  (which may involve crosses
and  book  transactions  and  which  may  involve  sales  to and  through  other
broker-dealers,  including  transactions,  of the nature described above) in the
over-the-counter  market,  in negotiated  transactions  or otherwise,  at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with such  resales  may pay to or receive  from the  purchasers  of such  Shares
commissions as described above.  Pursuant to the registration  agreement entered
into in connection with the transactions described above, the Company has agreed
to indemnify the Selling  Stockholders  against certain  liabilities,  including
liabilities under the Securities Act.

                          DESCRIPTION OF CAPITAL STOCK

     The authorized  capital stock of the Company consists of 50,000,000  shares
of Common Stock, no par value;  and 5,000,000  shares of Preferred Stock, no par
value.  The following  summary of certain  provisions  of the Company's  capital
stock describes all material  provisions of, but does not purport to be complete
and is subject to and is qualified in its entirety by, the Restated  Articles of
Incorporation  and the Amended  and  Restated  By-Laws of the  Company  that are
incorporated  herein by reference as exhibits to the  Registration  Statement of
which this Prospectus forms a part and by the provisions of applicable law.

Common Stock

     At July 31, 1998, there were 13,262,866 shares of Common Stock outstanding.
In addition,  at July 31, 1998,  850,000 shares of Common Stock are reserved for
issuance  pursuant to the Company's  1993 Employee  Stock Option Plan and 50,000
shares of Common  Stock are  reserved  under  the  Company's  1996  Non-Employee
Director  Stock  Option  Plan  (the  "Director  Plan").   Cumulative  voting  is
prohibited  in the  election  of  directors.  The  holders  of Common  Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally  available  therefor.  In
the event of a  liquidation,  dissolution  or  winding  up of the  Company,  the
holders of Common Stock are entitled to share  equally and ratably in the assets
available for distribution after payment of all liabilities,  and subject to any
prior  rights  of any  holders  of  preferred  stock  that  at the  time  may be
outstanding.  The Common Stock is not  redeemable,  does not have any conversion
rights  and is not  subject to call.  Holders of shares of Common  Stock have no
preemptive rights to maintain their respective percentage of ownership in future
offerings or sales of stock by the Company. The shares of Common Stock presently
outstanding are fully paid and  non-assessable.  The Company delisted the Common
Stock from the Nasdaq  National Market on October 17, 1996, and the Common Stock
commenced trading on the NYSE under the symbol "SGR" on October 18, 1996.

     Each  outstanding  share of Common Stock will entitle the holder thereof to
five votes on each matter properly  submitted to the shareholders of the Company
for their  vote,  waiver,  release  or other  action;  except  that no holder of
outstanding  shares of Common  Stock will be entitled to exercise  more than one
vote on any such matter in respect of any share of Common  Stock with respect to
which  there has been a change in  beneficial  ownership  during  the four years
immediately  preceding  the  date  on  which  a  determination  is  made  of the
shareholders  of the  Company  who are  entitled  to vote or to take  any  other

                                       8
<PAGE>

action. A change in beneficial ownership of an outstanding share of Common Stock
will be deemed  to have  occurred  whenever  a change  occurs  in any  person or
persons  who,   directly  or  indirectly,   through  any  contract,   agreement,
arrangement,  understanding,  relationship or otherwise has or shares any of the
following:

     (a) voting power, which includes,  without limitation, the right to vote or
the power to direct the voting power of such share of Common Stock;

     (b) investment  power,  which includes,  without  limitation,  the power to
direct the sale or other disposition of such share of Common Stock;

     (c) the right to  receive or to retain  the  proceeds  of any sale or other
disposition of such share of Common Stock; or

     (d) the right to receive or to retain any distributions, including, without
limitation, cash dividends, in respect of such share of Common Stock.

     Without  limiting the generality of the foregoing,  the following events or
conditions will be deemed to involve a change in beneficial ownership of a share
of Common Stock:

     (a) in the absence of proof to the  contrary  provided in  accordance  with
certain  procedures  set forth below,  a change in beneficial  ownership will be
deemed to have  occurred  (i) whenever an  outstanding  share of Common Stock is
transferred  of  record  into the name of any  other  person,  and (ii) upon the
issuance of shares in a public offering;

     (b) in the case of an  outstanding  share of Common Stock held of record in
the name of a corporation,  general  partnership,  limited  partnership,  voting
trustee, bank, trust company,  broker, nominee or clearing agency, if it has not
been established  pursuant to the procedures set forth below that there has been
no change in the person or persons who or that direct the exercise of the rights
referred  to  in  (a)  through  (d),  inclusive,  above  with  respect  to  such
outstanding  share of Common Stock during the four years  immediately  preceding
the date on which a  determination  is made of the  shareholders  of the Company
entitled  to vote or to take  any  other  action,  then a change  in  beneficial
ownership of such share of Common Stock shall be deemed to have occurred  during
such period;

     (c) in the case of an  outstanding  share of Common Stock held of record in
the name of any person as a trustee,  agent,  guardian  or  custodian  under the
Uniform  Gifts to  Minors  Act as in  effect  in any  jurisdiction,  a change in
beneficial  ownership will be deemed to have occurred whenever there is a change
in the beneficiary of such trust,  the principal of such agent, the ward of such
guardian,  the  minor  for whom  such  custodian  is  acting or a change in such
trustee, agent, guardian or custodian; or

     (d) in the case of outstanding shares of Common Stock beneficially owned by
a person or group of persons, who, after acquiring,  directly or indirectly, the
beneficial  ownership of 5% of the outstanding  shares of Common Stock, fails to
notify the Company of such ownership within ten days after such  acquisition,  a
change in beneficial  ownership of such shares of Common Stock will be deemed to
occur on each day while such failure continues.

     Notwithstanding  any other provisions in the Company's Restated Articles of
Incorporation  to  the  contrary,  no  change  in  beneficial  ownership  of  an
outstanding  share of Common Stock shall be deemed to have occurred  solely as a
result of:

     (a) any  transfer of any interest in an  outstanding  share of Common Stock
pursuant to a bequest or inheritance,  by operation of law upon the death of any
individual or by any other transfer without valuable  consideration,  including,
without limitation, a gift that is made in good faith and not for the purpose of
circumventing   the   provisions   of  the   Company's   Restated   Articles  of
Incorporation;

     (b) any changes in  beneficiary  of any trust,  or any  distribution  of an
outstanding  share of Common  Stock from trust,  by reason of the birth,  death,
marriage or divorce of any natural  person;  the adoption of any natural  person

                                       9
<PAGE>

prior to age 18; or the passage of a given period of time or the  attainment  by
any natural  person of a specific  age; or the  creation or  termination  of any
guardianship or custodial arrangement;

     (c) any appointment of a successor  trustee,  agent,  guardian or custodian
with respect to an  outstanding  share of Common Stock if neither such successor
has nor its  predecessor  had the power to vote or to  dispose  of such share of
Common Stock without further instructions from others;

     (d) any change in the person to whom  dividends or other  distributions  in
respect of an  outstanding  share of Common Stock are to be paid pursuant to the
issuance or modification of a revocable dividend payment order;

     (e) any  issuance of a share of Common Stock by the Company or any transfer
by the  Company  of a share of Common  Stock  held in  treasury  other than in a
public offering thereto,  unless otherwise  determined by the Board of Directors
at the time of authorizing such issuance or transfer;

     (f) any  giving of a proxy in  connection  with a  solicitation  of proxies
subject to the provisions of Section 14 of the Securities  Exchange Act of 1934,
as amended, and the rules and regulations thereunder promulgated;

     (g) any  transfer,  whether or not with  consideration,  among  individuals
related or formerly  related by blood,  marriage or  adoption  ("relatives")  or
between a relative and any person  controlled by one or more relatives where the
principal  purpose  for the  transfer  is to further  the  estate  tax  planning
objectives of the transferor or of relatives of the transferor;

     (h) any appointment of a successor  trustee as a result of the death of the
predecessor  trustee  (which  predecessor  trustee  shall  have  been a  natural
person);

     (i) any  appointment of a successor  trustee who or which was  specifically
named in a trust instrument prior to the effective date of this offering; or

     (j) any appointment of a successor  trustee as a result of the resignation,
removal  or  failure  to  qualify  of a  predecessor  trustee  or as a result of
mandatory  retirement  pursuant  to the  express  terms  of a trust  instrument;
provided, that less than 50% of the trustees administering any single trust will
have changed  (including in such  percentage  the  appointment  of the successor
trustee) during the four-year period preceding the appointment of such successor
trustee.

     All  determinations  concerning  changes in  beneficial  ownership,  or the
absence of any such  change,  are made by the Board of  Directors of the Company
or, at any time when the Company  employs a transfer  agent with  respect to the
shares of Common Stock, at the Company's request,  by such transfer agent on the
Company's   behalf.   Written   procedures   designated   to   facilitate   such
determinations  are to be established and may be amended,  from time to time, by
the Board of Directors.  Such procedures will provide,  among other things,  the
manner of proof of facts that will be accepted and the frequency with which such
proof may be required to be renewed.  The Company and any transfer agent will be
entitled to rely on any and all information  concerning  beneficial ownership of
the outstanding shares of Common Stock coming to their attention from any source
and in any manner  reasonably  deemed by them to be  reliable,  but  neither the
Company  nor any  transfer  agent  shall be  charged  with any  other  knowledge
concerning the beneficial ownership of outstanding shares of Common Stock.

     In the event of any  stock  split or stock  dividend  with  respect  to the
outstanding  shares of Common  Stock,  each share of Common  Stock  acquired  by
reason of such split or dividend will be deemed to have been beneficially  owned
by the same person from the same date as that on which  beneficial  ownership of
the  outstanding  share or shares of Common  Stock,  with  respect to which such
share of Common Stock was distributed, was acquired.

     Each outstanding share of Common Stock,  whether at any particular time the
holder  thereof  is  entitled  to  exercise  five  votes or one  vote,  shall be
identical to all other shares of Common Stock in all respects,  and together the
outstanding  shares of Common Stock will  constitute a single class of shares of
the Company.


                                       10


<PAGE>



Preferred Stock

     The Board of  Directors  is  authorized  to  provide  for the  issuance  of
5,000,000  shares of Preferred Stock in one or more series and to fix the number
of  shares  constituting  any such  series,  the  voting  powers,  designations,
preferences  and relative,  participating,  optional or other special rights and
qualifications,  limitations  or  restrictions  thereof,  including the dividend
rights,  dividend  rate,  terms  of  redemption,  redemption  price  or  prices,
conversion  rights and liquidation  preferences of the shares  constituting  any
series,  without any further vote or action by the  shareholders of the Company.
The issuance of Preferred Stock by the Board of Directors could adversely affect
the rights of holders of Common Stock. For example,  issuance of Preferred Stock
could result in a series of securities  outstanding  that would have preferences
over the Common  Stock with  respect to dividends  and in  liquidation  and that
could (upon conversion or otherwise) enjoy all of the rights  appurtenant to the
Common  Stock.  The  authority  possessed  by the  Board of  Directors  to issue
Preferred  Stock could  potentially be used to discourage  attempts by others to
obtain control of the Company through merger,  tender offer,  proxy,  consent or
otherwise by making such attempts more difficult to achieve or more costly.  The
Board of Directors may issue  Preferred Stock without  shareholder  approval and
with voting and conversion  rights which could adversely affect the voting power
of holders of Common Stock.  There are no agreements or  understandings  for the
issuance of Preferred Stock, and the Board of Directors has no present intention
to issue any shares of Preferred Stock.

Louisiana Fair Price and Control Acquisition Statutes

     Under  Louisiana  law, the  acquisition  of voting power (a "control  share
acquisition") of an "issuing public  corporation"  that results in the purchaser
acquiring voting power in excess of 20%, 33% or 51% of the total voting power of
the issuing  public  corporation  requires  approval of a majority of the voting
power  of the  issuing  public  corporation  and  each  class  entitled  to vote
separately on the proposal,  excluding the shares of the acquiring  person,  any
officer of the issuing public corporation and any employee of the issuing public
corporation  who is also a director of such  corporation.  Shares  acquired in a
control share  acquisition  without such approval will have no voting rights and
under certain  circumstances  may be subject to a redemption by the corporation.
The  restrictions  imposed  under  such  law  are  applicable  to all  Louisiana
corporations that fall within the definition of an "issuing public  corporation"
(as does the  Company)  unless the  issuing  public  corporation's  articles  of
incorporation  or by-laws,  as in effect  before the  acquisition  has occurred,
provide that such provisions do not apply.  The Company's  Restated  Articles of
Incorporation  and Amended and Restated By-Laws do not contain such a provision;
therefore,  the above  restrictions  contained in Louisiana  law do apply to the
Company.

     In addition, if certain elections were to be made by the Company's Board of
Directors under the Louisiana Business Corporation Law, unless certain price and
procedural  requirements are met, certain  business  combinations  involving the
Company and any holder of 20% or more of the Company's  outstanding voting stock
may be required  to be approved by at least (i) 80% of the votes  entitled to be
cast by holders of the outstanding voting stock and (ii) two-thirds of the votes
entitled to be cast by the holders of voting  stock other than the voting  stock
held by such  holder.  This  provision  could be regarded  as a  deterrent  to a
takeover  of the  Company  and  could be  applied  selectively  by the  Board of
Directors.

Limitation of Director and Officer Liability

     The Company's  Restated Articles of Incorporation  contain provisions which
eliminate  the  personal  liability of its  directors  and officers for monetary
damages resulting from breaches of their fiduciary duty other than liability for
breaches of the duty of loyalty,  acts or  omissions  not in good faith or which
involve  intentional  misconduct or a knowing  violation of law, for  violations
under Section 92(D) of the Louisiana Business Corporation Law or any transaction
from which the director or officer  derived an improper  personal  benefit.  The
Restated   Articles  of   Incorporation   contain   provisions   requiring   the
indemnification  of the Company's  directors and officers to the fullest  extent
permitted by Section 83 of the Louisiana  Business  Corporation  Law,  including
circumstances in which indemnification is otherwise  discretionary.  The Company
believes that these  provisions  are  necessary to attract and retain  qualified
persons as directors and officers.


                                        11


<PAGE>



Classified Board of Directors

     The Company's Restated Articles of Incorporation provide that if the number
of directors  constituting  the entire Board of Directors is increased to twelve
or more members, then at the next meeting of shareholders at which directors are
to be elected,  the Board of Directors shall be divided into three classes,  the
members of which will serve staggered  three-year  terms.  The Company  believes
that a classified  board of directors  could help to assure the  continuity  and
stability  of the  Board's  and  Shaw's  business  strategies  and  policies  as
determined  by the  Board of  Directors.  The  classified  board  provision,  if
implemented,  could have the effect of making the removal of incumbent directors
more  time-consuming  and,  therefore,  discouraging a third party from making a
tender offer or otherwise attempting to obtain control of Shaw, even though such
an  attempt  might  be  beneficial  to Shaw  and  its  shareholders.  Thus,  the
classified   board  provision  could  increase  the  likelihood  that  incumbent
directors would retain their positions.

Advance Notice Provisions for Certain Shareholder Actions

     The  Company's  Amended and Restated  By-Laws  establish an advance  notice
procedure  with regard to the  nomination,  other than by or at the direction of
the Board or a committee  thereof,  of candidates for election as directors (the
"Nomination  Procedure") and with regard to certain matters to be brought before
an annual meeting of shareholders of the Company (the "Business Procedure").

     Under the Business  Procedure,  a shareholder  seeking to have any business
conducted at an annual meeting must give prior written  notice,  in proper form,
to the Secretary of the Company.  The  requirements as to the form and timing of
that notice are specified in the Company's Amended and Restated By-Laws.  If the
Chairman or other officer presiding at a meeting  determines that other business
was not properly  brought  before such meeting in  accordance  with the Business
Procedure, such business will not be conducted at the meeting.

     The  Nomination  Procedure  requires that a shareholder  give prior written
notice,  in proper form,  of a planned  nomination  for the  Company's  Board of
Directors to the Secretary of the Company.  The  requirements as to the form and
timing of that notice are specified in the By-Laws.  If the election  inspectors
determine  that a person was not  nominated in  accordance  with the  Nomination
Procedure, such person will not be eligible for election as a director.

     Although  the  By-Laws  do not give the  Board of  Directors  any  power to
approve or disapprove  shareholder  nominations for the election of directors or
of any other business  desired by  shareholders  to be conducted at an annual or
any other meeting,  the Company's  Amended and Restated By-Laws (i) may have the
effect of  precluding a nomination  for the election of directors or  precluding
the conduct of business at a particular  annual meeting if the proper procedures
are not followed,  or (ii) may discourage or deter a third party from conducting
a  solicitation  of proxies  to elect its own slate of  directors  or  otherwise
attempting  to  obtain  control  of the  Company,  even if the  conduct  of such
solicitation  or  such  attempt  might  be  beneficial  to the  Company  and its
shareholders.

Super Majority Provisions

     The  Company's  Restated  Articles  of  Incorporation   contain  provisions
requiring the affirmative vote of the holders of at least 75% of voting power of
the  Company's  capital  stock  to amend  certain  provisions  of the  Articles,
including provisions relating to the removal of directors.

     The Company's  Restated  Articles of Incorporation  require the approval of
the holders of at least 75% of the Company's outstanding shares of Common Stock,
not including  shares held by a Related  Person (as defined  below),  to approve
certain Business Combinations (as defined below) and related  transactions.  The
term  "Related  Person"  is  defined to  include  any  individual,  corporation,
partnership  or other entity which owns  beneficially,  directly or  indirectly,
more than 5% of the outstanding shares of Common Stock of the Company.  The term
"Business Combination" is defined to include, among other things, (i) any merger
or consolidation of the Company or a subsidiary of the Company which constitutes
more than 50% of the assets of the Company, other than a merger or consolidation
which results in the voting  securities of the Company  outstanding  immediately
prior thereto continuing to represent more than 50% of the combined voting power

                                       12
<PAGE>

of the  voting  securities  of the  surviving  entity;  (ii)  any  sale,  lease,
exchange,  transfer or other  disposition  of more than 50% of the assets of the
Company; (iii) any reclassification of the Common Stock of the Company; and (iv)
any liquidation or dissolution of the Company.

Transfer Agent and Registrar

     The  transfer  agent and  registrar  for the  Common  Stock is First  Union
National Bank, Charlotte, North Carolina.

                                  LEGAL MATTERS

     The  legality of the shares of Common Stock  offered  hereby will be passed
upon for the  Company  by the law firm of  Kantrow,  Spaht,  Weaver & Blitzer (A
Professional Law Corporation),  P.O. Box 2997, Baton Rouge, Louisiana, 70821. As
of July 31,  1998,  members of the firm of Kantrow,  Spaht,  Weaver & Blitzer (A
Professional Law Corporation) owned,  directly or indirectly,  approximately 100
shares of the Company's Common Stock.

                                     EXPERTS

     The consolidated  financial  statements of The Shaw Group Inc. included and
incorporated  by  reference  in this  Prospectus  have  been  audited  by Arthur
Andersen  LLP  and  Hannis  T.  Bourgeois  &  Co.,  L.L.P.,  independent  public
accountants,  as  indicated  in their  reports  with  respect  thereto,  and are
included and  incorporated by reference herein in reliance upon the authority of
such firms as experts in accounting  and  auditing.  The single  jointly  signed
auditor's  report is considered to be the  equivalent of two  separately  signed
auditor's  reports.  Thus,  each  firm  represents  that  it has  complied  with
generally  accepted  auditing  standards and is in a position that would justify
being the only signatory of the report.



                                        13


<PAGE>
<TABLE>
<CAPTION>
================================================================================  =================================================
<S>                                                                                              <C>
   No  dealer,  salesman  or any other  person has been  authorized  to give any
information  or to make any  representations  in  connection  with this offering
other than those  contained in this Prospectus and, if given or made, such other
information  or  representations  must  not be  relied  upon as  having  been so
authorized by the Company.  This  Prospectus does not constitute an offer of any                  645,000 Shares
securities  other  than  those to which it  relates  or any offer to sell,  or a
solicitation  of an offer to buy,  other than those to which it relates,  in any
jurisdiction  to any  person to whom it is not lawful to make such offer in such
jurisdiction.  Neither  the  delivery  of  this  Prospectus  nor any  sale  made                 The Shaw Group Inc.
hereunder shall, under any circumstances,  create any implication that there has
not been a change in the facts set forth in this  Prospectus  or the  affairs of                  
the Company since the date hereof or that the  information  herein is correct as                    Common Stock
of any time subsequent to the date hereof.
                                                                                               



                                                                                             



                                                                                                

                            __________



                         TABLE OF CONTENTS                                                          ______________

                                                                           Page                       PROSPECTUS

                                                                          -----                                        
Incorporation of Certain Documents
  by Reference........................................................     2    
Available Information.................................................     2
The Company...........................................................     3
Risk Factors..........................................................     3
Use of Proceeds.......................................................     7
Selling Stockholders and Plan of Distribution.........................     7
Description of Capital Stock..........................................     8
Legal Matters.........................................................    13
Experts...............................................................    13
                                                                                                



                                 _____________






                                                                                                 September 4, 1998




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</TABLE>



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