<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
SCHEDULE 13E-3
RULE 13E-3 TRANSACTION STATEMENT
(Pursuant to Section 13(e) of the Securities Exchange Act of 1934)
------------------
J. RAY MCDERMOTT, S.A.
(Name of Issuer)
------------------
MCDERMOTT INTERNATIONAL, INC.
MCDERMOTT ACQUISITION COMPANY, INC.
J. RAY MCDERMOTT, S.A.
(Name of Person(s) Filing Statement)
------------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
------------------
P 64658 10 0
(CUSIP Number of Class of Securities)
S. WAYNE MURPHY ROBERT H. RAWLE
MCDERMOTT INTERNATIONAL, INC. J. RAY MCDERMOTT, S.A.
1450 POYDRAS STREET 1450 POYDRAS STREET
NEW ORLEANS, LA 70161 NEW ORLEANS, LA 70161
TELEPHONE: (504) 587-5400 TELEPHONE: (504) 587-5400
(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications on Behalf of Person(s) Filing Statement)
------------------
WITH COPIES TO:
CHRISTOPHER MAYER R. JOEL SWANSON
DAVIS POLK & WARDWELL BAKER & BOTTS, L.L.P.
450 LEXINGTON AVENUE ONE SHELL PLAZA
NEW YORK, NEW YORK 10017 HOUSTON, TEXAS 77002-4995
TELEPHONE: (212) 450-4000 TELEPHONE: (713) 229-1234
This statement is filed in connection with (check the appropriate box):
a. [_] The filing of solicitation materials or an information statement subject
to Regulation 14A, Regulation 14C or Rule 13e-3(c) under the Securities
Exchange Act of 1934.
b. [_] The filing of a registration statement under the Securities Act of 1933.
c. [X] A tender offer.
d. [_] None of the above.
Check the following box if the soliciting materials or information statement
referred to in checking box (a) are preliminary copies: [_]
CALCULATION OF FILING FEE
================================================================================
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- --------------------------------------------------------------------------------
$525,416,977.54 $105,084
================================================================================
* Calculated by multiplying $35.62, the per share tender offer price, by
14,750,617, the sum of the number of shares of Common Stock sought in the
Offer and the 393,699 shares of Common Stock subject to options that will be
vested and exercisable as of June 11, 1999.
** Calculated as 1/50 of 1% of the transaction value.
[X] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously
paid. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
Amount Previously Paid: $105,084
Form or Registration No: Schedule 14D-1, Registration No. 005-48641
Filing Party: McDermott International, Inc.
Date Filed: May 13, 1999
================================================================================
<PAGE>
INTRODUCTION
This Rule 13e-3 Transaction Statement on Schedule 13E-3 (the "Schedule 13E-3")
is being filed by (i) McDermott International, Inc., a Panama corporation
("Parent"), (ii) McDermott Acquisition Company, Inc., a Panama corporation
("Purchaser") and (iii) J. Ray McDermott, S.A., a Panama corporation (the
"Company") pursuant to Section 13(e) of the Securities Exchange Act of 1934, as
amended, and Rule 13e-3 thereunder in connection with the tender offer by
Purchaser for all of the issued and outstanding shares of common stock, par
value $0.01 per share (the "Shares"), of the Company (other than Shares
beneficially owned by Parent) upon the terms and subject to the conditions set
forth in the Offer to Purchase dated May 13, 1999 (the "Offer to Purchase") and
the related Letter of Transmittal (which together constitute the "Offer"),
copies of which are filed as Exhibits (d)(1) and (d)(2) hereto, respectively.
The following Cross Reference Sheet, prepared pursuant to General Instruction
F to Schedule 13E-3, shows the location in the Tender Offer Statement on
Schedule 14D-1 filed by Parent and Purchaser (the "Schedule 14D-1") with the
Securities and Exchange Commission on the date hereof of the information
required to be included in this Schedule 13E-3. The information set forth in the
Schedule 14D-1, including all exhibits thereto, is hereby expressly incorporated
herein by reference as set forth in the Cross Reference Sheet and the responses
in this Schedule 13E-3, and such responses are qualified in their entirety by
reference to the information contained in the Offer to Purchase and the
schedules and annexes thereto.
The information contained in this Schedule 13E-3 concerning the Company,
including, without limitation, the deliberations of the Company's Board of
Directors in connection with the transaction, the opinion of the Company's
financial advisor and the Company's capital structure and historical financial
statements and projections, was supplied by the Company. Parent and Purchaser
take no responsibility for the accuracy of such information. The information
contained in this Schedule 13E-3 concerning Parent and Purchaser was supplied by
Parent and Purchaser. The Company takes no responsibility for the accuracy of
such information.
2
<PAGE>
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
- ---------------------- WHERE LOCATED
ITEM IN SCHEDULE 13E-3 IN SCHEDULE 14D-1
<S> <C>
Item 1(a)......................................... Item 1(a)
Item 1(b)......................................... Item 1(b)
Item 1(c)......................................... Item 1(c)
Item 1(d)......................................... *
Item 1(e)......................................... *
Item 1(f)......................................... *
Item 2(a)......................................... Item 2(a)
Item 2(b)......................................... Item 2(b)
Item 2(c)......................................... Item 2(c)
Item 2(d)......................................... Item 2(d)
Item 2(e)......................................... Item 2(e)
Item 2(f)......................................... Item 2(f)
Item 2(g)......................................... Item 2(g)
Item 3............................................ Item 3
Item 4............................................ *
Item 5............................................ Item 5
Item 6(a)......................................... Item 4(a)
Item 6(b)......................................... *
Item 6(c)......................................... Item 4(b)
Item 6(d)......................................... Item 4(c)
Item 7(a)......................................... Item 5
Item 7(b)......................................... *
Item 7(c)......................................... *
Item 7(d)......................................... *
Item 8............................................ *
Item 9............................................ *
Item 10........................................... Item 6
Item 11........................................... Item 7
Item 12........................................... *
Item 13........................................... *
Item 14........................................... *
Item 15(a)........................................ *
Item 15(b)........................................ Item 8
Item 16........................................... Item 10(f)
Item 17........................................... Item 11
</TABLE>
- -----------------
/*/ The Item is located in the Schedule 13E-3 only.
3
<PAGE>
ITEM 1. ISSUER AND CLASS OF SECURITY SUBJECT TO THE TRANSACTION
(a)-(c) The response to Item 1(a)-(c) of the Schedule 14D-1 is incorporated
herein by reference.
(d) The information set forth in the Offer to Purchase under "Dividends and
Distributions" is incorporated herein by reference.
(e) Not applicable.
(f) The information set forth in the Offer to Purchase under "Certain
Information Concerning the Company" is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND
This Statement is filed by Purchaser, Parent and the Company. The response to
Item 2 of the Schedule 14D-1 is incorporated herein by reference. The
information set forth in the Offer to Purchase under "Certain Information as to
the Company" and under Schedules I and II is incorporated herein by reference.
During the last five years, the Company and, to the best knowledge of the
Company, none of the persons listed in Schedules I and II of the Offer to
Purchase has been (i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting activities subject to, federal or state
securities laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS
The response to Item 3 of the Schedule 14D-1 is incorporated herein by
reference.
ITEM 4. TERMS OF THE TRANSACTION
(a) The information set forth in the Offer to Purchase on the cover page
thereof and under "Introduction", "Background of the Offer; Recommendation of
the Independent Committee and the Company Board", "The Merger Agreement", "Terms
of the Offer", "Acceptance for Payment and Payment for Shares", "Procedures for
Accepting the Offer and Tendering Shares", "Withdrawal Rights", "Financing of
the Offer and the Merger", "Dividends and Distributions", "Certain Effects of
the Offer", and "Certain Conditions of the Offer" is incorporated herein by
reference.
(b) Not applicable.
ITEM 5. PLANS OR PROPOSALS OF THE ISSUER OR AFFILIATE
The response to Item 5 of the Schedule 14D-1 is incorporated herein by
reference.
ITEM 6. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) The response to Item 4(a) of the Schedule 14D-1 is incorporated herein by
reference.
(b) The information set forth in the Offer to Purchase in "Fees and Expenses"
is incorporated herein by reference.
(c) The response to Item 4(b) of the Schedule 14D-1 is incorporated herein by
reference.
(d) The response to Item 4(c) of the Schedule 14D-1 is incorporated herein by
reference.
ITEM 7. PURPOSE(S), ALTERNATIVES, REASONS AND EFFECTS
(a) The response to Item 5 of the Schedule 14D-1 is incorporated herein by
reference.
4
<PAGE>
(b) The information set forth in the Offer to Purchase under "Background of
the Offer; Recommendation of the Independent Committee and the Company Board",
"Fairness of the Offer and the Merger" and "Purpose and Structure of the Offer
and the Merger; Reasons of Parent for the Offer and the Merger" is incorporated
herein by reference.
(c)-(d) The information set forth in the Offer to Purchase under
"Introduction", "Background of the Offer; Recommendation of the Independent
Committee and the Company Board", "Fairness of the Offer and the Merger",
"Position of Parent and Purchaser Regarding Fairness of the Offer and the
Merger", "Purpose and Structure of the Offer and the Merger; Reasons of Parent
for the Offer and the Merger", "Position of Parent and Purchaser Regarding
Fairness of the Offer and the Merger", "Plans for the Company after the Offer
and the Merger", "United States Federal Income Tax Consequences" and "Certain
Effects of the Offer" is incorporated herein by reference.
ITEM 8. FAIRNESS OF THE TRANSACTION
(a)-(e) The information set forth in the Offer to Purchase under
"Introduction", "Background of the Offer; Recommendation of the Independent
Committee and the Company Board", "Fairness of the Offer and the Merger",
"Position of Parent and Purchaser Regarding Fairness of the Offer and the
Merger" and "Purpose and Structure of the Offer and the Merger; Reasons of
Parent for the Offer and the Merger" is incorporated herein by reference.
(f) Not applicable.
ITEM 9. REPORTS, OPINIONS, APPRAISALS AND CERTAIN NEGOTIATIONS
The information set forth in the Offer to Purchase under "Background of the
Offer; Recommendation of the Independent Committee and the Company Board",
"Fairness of the Offer and the Merger", "Opinion of Financial Advisor to the
Independent Committee", "Opinion of Financial Advisor to the Finance Committee",
"Position of Parent and Purchaser Regarding Fairness of the Offer and the
Merger" and Annexes B and C are incorporated herein by reference.
ITEM 10. INTEREST IN SECURITIES OF THE ISSUER
The response to Item 6 of the Schedule 14D-1 is incorporated herein by
reference. The information set forth in the Offer to Purchase under "Certain
Information Concerning the Company" is incorporated herein by reference.
ITEM 11. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS WITH RESPECT TO THE ISSUER'S
SECURITIES
The response to Item 7 of the Schedule 14D-1 is incorporated herein by
reference.
ITEM 12. PRESENT INTENTION AND RECOMMENDATION OF CERTAIN PERSONS WITH REGARD TO
THE TRANSACTION
The information set forth in the Offer to Purchase under "Interests of Certain
Persons in the Offer and the Merger" is incorporated herein by reference.
ITEM 13. OTHER PROVISIONS OF THE OFFER AND THE MERGER
(a) The information set forth in the Offer to Purchase under "Introduction",
"Rights of Shareholders in the Offer and the Merger", and "The Merger Agreement"
is incorporated herein by reference.
(b) Not applicable.
(c) Not applicable.
ITEM 14. FINANCIAL INFORMATION
(a) The information set forth in the Offer to Purchase under "Certain
Information Concerning the Company" is incorporated herein by reference. In
addition, the Company's audited financial statements (and related notes) for the
fiscal years ended March 31, 1997 and March 31, 1998, and the Company's
unaudited financial statements (and related
5
<PAGE>
notes) for the three-month and nine-month periods ended December 31, 1998, are
attached to the Offer to Purchase as Annexes D and E thereto, respectively.
(b) Not applicable.
ITEM 15. PERSONS AND ASSETS EMPLOYED, RETAINED OR UTILIZED
(a) The information set forth in the Offer to Purchase under "Background of
the Offer and the Merger; Recommendation of the Independent Committee and the
Company Board", "Plans for the Company after the Offer and the Merger",
"Financing of the Offer and Merger", and "Certain Effects of the Offer" is
incorporated herein by reference.
(b) The response to Item 8 of the Schedule 14D-1 is incorporated herein by
reference.
ITEM 16. ADDITIONAL INFORMATION
The response to Item 10(f) of the Schedule 14D-1 is incorporated herein by
reference.
ITEM 17. MATERIAL TO BE FILED AS EXHIBITS
(a)(1) Commitment Letter (including the related term sheet), dated May 7,
1999, from Citibank, N.A.*
(b)(1) Opinion of Simmons & Company International, dated May 6, 1999
(attached as Annex B to the Offer to Purchase).*
(b)(2) Presentation of Simmons & Company International, dated May 6, 1999.
(b)(3) Opinion of Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated
May 6, 1999 (attached as Annex C to the Offer to Purchase).*
(b)(4) Presentation of Merrill Lynch, Pierce, Fenner & Smith Incorporated,
dated April 28, 1999.
(c)(1) Agreement and Plan of Merger, dated as of May 7, 1999, between the
Company and Parent.*
(c)(2) Confidentiality Agreement, dated February 17, 1999, between the
Company and Parent.*
(d)(1) Offer to Purchase, dated May 7, 1999.*
(d)(2) Letter of Transmittal.*
(d)(3) Notice of Guaranteed Delivery.*
(d)(4) Letter from Merrill Lynch, Pierce, Fenner & Smith Incorporated to
Brokers, Dealers, Commercial Banks, Trust Companies and
Other Nominees.*
(d)(5) Letter to Clients for Use by Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees.*
(d)(6) Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.*
(d)(7) Summary Advertisement as published in The Wall Street
Journal on May 13, 1999.*
6
<PAGE>
(d)(8) Text of Joint Press Release issued by Parent and the Company on
May 7, 1999.*
(d)(9) Text of Press Release issued by Parent on May 13, 1999.*
(e) Not applicable.
(f) Not applicable.
(g)(1) Complaint filed in Pasternac, et al. v. William J. Johnson, Robert H.
Rawle, Roger E. Tetrault, Rick L. Burdick, Richard E. Woolbert,
Robert L. Howard, Sean C. O'Keefe, Cedric Ritchie, McDermott
International, Inc. and J. Ray McDermott, S.A. (Civil District
Court for the Parish of Orleans in the State of Louisiana, filed
March 17, 1999).
(g)(2) Complaint filed in Hill v. J. Ray McDermott, S.A., McDermott
International, Inc., Roger E. Tetrault, Rick L. Burdick,
Robert L. Howard, William J. Johnson, Sean Charles O'Keefe,
Robert H. Rawle, Cedric E. Ritchie, Richard E. Woolbert and
John Doe (Civil District Court for the Parish of Orleans in the State
of Louisiana, filed April 7, 1999).
- -------------------
* Incorporated by reference to the Statement on Schedule 14D-1 filed by
Purchaser and Parent on May 13, 1999.
7
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Date: May 13, 1999
MCDERMOTT INTERNATIONAL, INC.
By: /s/ S. W. Murphy
--------------------------------------------------
Name: S. W. Murphy
Title: Senior Vice President, General Counsel and
Corporate Secretary
MCDERMOTT ACQUISITION COMPANY, INC.
By: /s/ Daniel R. Gaubert
--------------------------------------------------
Name: Daniel R. Gaubert
Title: Treasurer
J. RAY MCDERMOTT, S.A.
By: /s/ R. H. Rawle
--------------------------------------------------
Name: R. H. Rawle
Title: President and Chief Operating Officer
8
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
(b)(2) Presentation of Simmons & Company International dated May 6, 1999.
(b)(4) Presentation of Merrill Lynch, Pierce, Fenner & Smith
Incorporated dated April 29, 1999.
9
<PAGE>
EXHIBIT 99(B)(2)
DRAFT
CONFIDENTIAL
REVIEW OF PROPOSED TRANSACTION (REVISED)
PREPARED FOR
JRM INDEPENDENT COMMITTEE
SIMMONS & COMPANY
INTERNATIONAL
MAY 6, 1999
<PAGE>
<TABLE>
<CAPTION>
Effective Premiums
- -----------------------------------------------------------------------------------------------------------------------------------
. Proposed transaction value of $35.62, per share, in cash was analyzed.
JRM Value Premium
--------- -------
Relative To JRM Close On May 4, 1999
------------------------------------
<S> <C> <C>
Nominal Premium $ 31.63 12.6%
No Premium On Excess Cash/1/ 21.4
Relative To Estimated JRM Price If No Transaction
-------------------------------------------------
Nominal Premium $ 29.89 19.2%
No Premium On Excess Cash/1/ 33.8
Relative To 20-Day Trading Average Through March 9, 1999
--------------------------------------------------------
Nominal Premium $ 22.43 58.8%
No Premium On Excess Cash/1/ 139.1
</TABLE>
________________________________
/1/ Excess cash is $12.95 per JRM share.
1
<PAGE>
<TABLE>
<CAPTION>
Analysis Of JRM Value At May 6, 1999
- -----------------------------------------------------------------------------------------------------------------------------------
(Amounts in dollars)
Prior To Announcement Date
---------------------------------------------------
One-Day 20-Day Trading 3-Month Trading
Prior/1/ Average/2/ Average/2/
----------- -------------- ---------------
<S> <C> <C> <C>
Percent Change To Current
- -------------------------
OSX 39.5% 51.2% 47.0%
Offshore Construction Comparables 55.7 68.2 61.6
Oil Service Comparables 46.7 57.8 52.5
------- ------- -------
Average 47.3% 59.1% 53.7%
======= ======= =======
JRM Share Price $ 24.38 $ 22.43 $ 24.26
Less: Excess Cash (12.95) (12.95) (12.95)
------- ------- -------
Net Share Price 11.43 9.48 11.31
Net Share Price Adjusted For Industry Recovery 16.83 15.09 17.38
Plus: Excess Cash 12.95 12.95 12.95
------- ------- -------
Estimated JRM Share Price If No Transaction $ 29.78 $ 28.04 $ 30.33
======= ======= =======
Estimated MII Share Price If No Transaction $ 28.83 $ 27.72 $ 29.48
======= ======= =======
</TABLE>
- --------------------------------------------------------------------------
Suggested JRM Value Adjusted For Recovery/3/ $29.38
======
Suggested MII Value Adjusted For Recovery/4/ $28.68
======
- --------------------------------------------------------------------------
________________________
1 March 9, 1999
2 Period ending March 9, 1999.
3 Closing price on May 6, 1999 was $30.50.
4 Closing price on May 6, 1999 was $27.94.
2
<PAGE>
<TABLE>
<CAPTION>
Comparable Minority Squeeze Out Premium Analysis - Cash Transactions/1/
- ------------------------------------------------------------------------------------------------------------------------------------
(Dollar amounts in millions, except per share)
Premium: Closing Valuation Relative
To Pre-Announcement Share Prices
------------------------------------
Four
Date Transaction Percent One-Day One-Week Weeks
Acquiror Subsidiary Announced Value Acquired Prior Prior Prior
- -------------------------------- -------------------------- ---------- --------- --------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
GTE Corp. Contel Cellular, Inc. 9/08/94 254.3 10.0 43.7 37.8 36.0
Pacificorp Pacific Telecom 11/02/94 159.0 13.4 23.7 23.7 23.7
Fleet Financial Group Fleet Mortgage Group 12/28/94 188.1 19.0 19.4 18.5 18.5
Club Mediterrenee SA Club Med Inc. 4/05/94 153.4 33.0 41.4 39.9 44.6
COBE Laboratories SA (Gambro AB) REN Corp-USA 7/14/95 182.1 47.0 27.0 20.3 26.0
Novartis AG SyStemix Inc. 5/27/96 107.6 26.8 25.6 23.1 25.3
Zurich Versicherungs GmbH Zurich Reinsurance Centre 1/13/97 319.0 34.0 17.1 18.5 11.6
Mafco Holdings Inc. Mafco Consolidated Group 1/21/97 116.8 15.0 23.5 23.5 27.6
Monsanto, Inc. Calgene Inc. 1/28/97 242.6 43.7 62.0 60.0 60.0
Anthem, Inc. Acordia, Inc. 6/02/97 193.2 33.2 12.7 11.5 26.0
Investor Group BET Holdings, Inc. 3/17/98 462.3 N/A 53.7 58.5 58.2
Dow AgroSciences (Dow Chemical) Mycogen Corp. 4/30/98 355.2 N/A 41.8 40.0 52.4
Usinor SA J&L Specialty Steel, Inc. 9/23/98 115.0 46.5 100.0 112.5 37.8
- ----------------------------------------------------------------------------------------------------------------------------------
Mean/2/ $223.0 28.6% 32.6% 31.3% 32.3%
Median 190.7 29.9 26.3 23.6 26.8
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
$35.62 Proposed Transaction/3/
- ------------------------------
Recent JRM Share Prices $520.3 37.2% 29.2%/4/ 22.2%/5/ 41.8%/6/
Adjusted JRM Prices Reflecting No Transaction 34.7 64.9 27.0
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Source: Securities Data Corporation.
_____________________________
1 Cash transactions in the $100 million to $1 billion range since
January 1, 1994.
2 Excluding high and low.
3 Premiums assume no premium on excess cash.
4 Relative to May 6, 1999 close $30.50.
5 Relative to April 29, 1999 close $31.50.
6 Relative to April 8, 1999 close $28.94.
3
<PAGE>
<TABLE>
<CAPTION>
Transaction Multiples
- --------------------------------------------------------------------------------
. At proposed transaction price of $35.62:
EPS P/E Ratio
------------------------- -----------------------
FY2000 FY2001 FY2000 FY2001
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Nominal P/E Ratio $ 1.10 $ 1.82 32.4x 19.6x
P/E Ratio On JRM Business 39.7x 17.6x
EBDIT EBDIT Multiple
------------------------- -----------------------
FY2000 FY2001 FY2000 FY2001
-------- -------- -------- ---------
Nominal EBDIT Multiple $ 82.8 $ 107.3 16.9x 13.1x
EBDIT Multiple On JRM Business 10.8x 8.3x
</TABLE>
4
<PAGE>
Comparison Of Multiples/1/
- ------------------------------------------------------------------------------
EBDIT Multiples P/E Ratios
(Calendar Years) (Calendar Years)
----------------- ---------------
1999 2000 1999 2000
------- ------- ------- -------
JRM Comparables
- ---------------
Aker Maritime 7.2x 6.9x 12.9x 12.1x
Coflexip 6.0x 5.6x 16.7x 14.8x
Cooper Cameron 12.5x 11.0x 34.7x 26.9x
Dril-Quip 18.3x 14.4x 34.9x 26.2x
DSND 6.3x 6.5x 9.4x 9.8x
IHC Caland 7.3x 6.8x 16.9x 14.8x
Global Industries 13.6x 10.1x 45.3x 23.1x
Oceaneering 6.4x 6.3x 14.4x 13.9x
Saipem 4.3x 4.1x 14.8x 13.1x
Stolt Comex 6.9x 6.1x 16.0x 12.8x
------ ------ ------ ------
Average 8.9x 7.8x 21.6x 16.7x
====== ====== ====== ======
MII Comparables
- ---------------
Babcock Intl. Group N/A N/A 10.9x 9.7x
Jacobs Engineering 4.1x 7.3x 16.0x 13.8x
Fluor 4.3x 4.6x 14.0x 16.1x
Litton Industries 7.8x 7.3x 15.3x 13.7x
Foster Wheeler 5.7x 6.5x 10.1x 16.4x
------ ------ ------ ------
Average 5.5x 6.4x 13.2x 13.9x
====== ====== ====== ======
- -------------------------
1 As of May 6, 1999.
5
<PAGE>
JRM Historical Stock Price
- -------------------------------------------------------------------------------
[GRAPH APPEARS HERE]
6
<PAGE>
Premiums And Accretion/(Dilution) In All-Cash Transaction
- --------------------------------------------------------------------------------
(Amounts in dollars)
Cash Offer
Value
$35.62
MII EPS Accretion/(Dilution) ----------
----------------------------
2000 $ (0.52)
Percent (28.5%)
2001 $ (0.34)
Percent (13.3%)
Excess Cash (Post Transaction) --
7
<PAGE>
EXHIBIT 99(B)(4)
- ------------------------------------------------------------
PRESENTATION TO MCDERMOTT SPECIAL COMMITTEE
REGARDING
MII's INTEREST IN ACQUIRING THE MINORITY
INTEREST OF JRM
April 29, 1999
[LOGO OF MERRILL LYNCH APPEARS]
<PAGE>
JRM DISCUSSION
================================================================================
Offer Value Matrix
<TABLE>
<CAPTION>
Implied Exchange Ratio
----------------------------------------------------------
1.150x 1.175X 1.200X 1.225X 1.250X 1.275X
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Premium to Current JRM Share Price/(a)/ 9.4% 11.8% 14.2% 16.6% 19.0% 21.3%
Implied Offer Value Per Share/(a)/ $ 33.93 $ 34.66 $ 35.40 $36.14 $36.88 $37.61
Incremental Cash to 1.15x Offer $ 0.00 $ 0.74 $ 1.48 $ 2.21 $ 2.95 $ 3.69
Aggregate Offer Value ($MM)/(b)/ $ 495.3 $ 506.1 $ 516.8 $527.6 $538.4 $549.1
Offer Value per JRM Share
-----------------------------------------------------------
$ 31.00 $ 32.00 $ 33.00 $34.00 $35.00 $36.00
------- ------- ------- ------ ------ ------
Premium to Current JRM Share Price/(a)/ 0.0% 3.2% 6.5% 9.7% 12.9% 16.1%
Implied Exchange Ratio/(a)/ 1.051x 1.085x 1.119x 1.153x 1.186x 1.220x
Incremental Cash to 1.15x Offer ($2.93) ($1.93) ($0.92) $ 0.08 $ 1.08 $ 2.08
Aggregate Offer Value ($MM)/(b)/ $ 452.6 $ 467.2 $ 481.8 $496.4 $511.0 $525.6
</TABLE>
_______________________________________
(a) Assumes JRM and MDR stock prices of $31.00 and $29.50, respectively as of
10:00 A.M. on April 29, 1999.
(b) Assumes 14.6 million JRM shares are acquired.
[LOGO OF MERRILL LYNCH APPEARS HERE]
2
<PAGE>
JRM DISCUSSION
================================================================================
Analysis of Premiums Paid in Minority Interest Transactions
<TABLE>
<CAPTION>
Premium Paid
(prior to announcement)
Date Ownership Offer -----------------------------
Announced Target Name Acquiror Name Transaction Value 1 day 1 week 1 month
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
12/7/98 Life Technologies, Inc. Dexter Corporation 51.5% $450.9 5.0% 5.4% -0.3%
6/29/98 Waste Management International Waste Management Inc 80.0% 431.4 39.4% 33.7% 42.6%
5/29/98 Meridian Technologies Investor Group 58.9% 103.1 22.2% 37.5% 41.0%
5/26/98 CIPE France SA Tyco International Ltd 63.0% 413.5 0.4% 1.4% 16.0%
5/25/98 Prime Resources Group Inc Homestake Mining Co. 50.6% 306.0 57.5% 52.4% 50.0%
5/21/98 PolyGram NV Universal Studios Inc 75.0% 2,547.0 2.7% 0.5% 30.1%
4/30/98 Mycogen Corp Dow AgroSciences 68.6% 322.0 41.8% 40.0% 53.4%
4/16/98 NCR Japan Ltd NCR Corp 70.0% 304.0 26.5% 36.4% 32.2%
4/7/98 Starckjohann Oy Trelleborg AB 54.0% 101.5 0.8% 3.3% 5.6%
3/17/98 BET Holdings Inc. Investor Group 56.0% 462.3 4.0% 14.3% 17.5%
3/6/98 Credit General Kredietbank NV 75.0% 141.1 4.2% 8.6% 9.9%
11/28/97 Vendome Luxury Group PLC Richemont 77.3% 1,729.0 25.8% 43.3% 39.6%
9/18/97 Guaranty National Corp Orion Capital Corp 77.3% 117.2 10.8% 23.9% 26.6%
6/26/97 Rhone-Poulenc Rorer Inc Rhone-Poulenc SA 60.8% 4,831.6 22.1% 22.8% 26.8%
6/2/97 Acordia Inc Anthem Inc 60.8% 193.2 12.7% 11.5% 26.5%
5/14/97 Enron Global Power & Pipelines Enron Corp 50.6% 428.0 11.8% 13.7% 20.8%
2/20/97 NHP Inc Apartment Investment 53.4% 114.5 28.2% 25.2% 19.5%
& Mgmt Co
1/21/97 Mafco Consolidated Grp Mafco Holdings Inc 85.0% 116.8 60.4% 60.4% 68.9%
1/13/97 Zurich Reinsurance Centre Zurich Versicherungs 66.0% 319.0 28.5% 30.0% 23.0%
GmbH
12/17/96 Allmerica Property & Casualty Allmerica Financial Corp 59.3% 816.9 15.8% 12.8% 15.3%
9/20/96 Lloyds Abbey Life PLC Lloyds TSB Group PLC 62.6% 2,590.0 7.3% 9.0% 13.0%
8/26/96 Bankers Life Holding Conseco Inc 88.4% 120.8 14.9% 10.5% 10.5%
5/27/96 SyStemix Inc Novartis AG 67.8% 107.6 4.7% 69.6% 59.2%
8/25/95 GEICO Corp Berkshire Hathaway 52.6% 2,349.2 25.6% 23.1% 25.8%
7/20/95 BTR Nylex Ltd BTR PLC 62.6% 3,290.0 36.9% 26.8% 27.2%
5/19/95 Bic Corp BIC SA 79.0% 212.6 13.3% 12.5% 30.1%
4/20/95 Rothams International PLC Cie Financiere 61.0% 2,600.0 28.1% 25.8% 31.6%
Richemont AG
4/7/95 LIN Broadcasting Corp McCaw Cellular 52.0% 3,209.4 6.9% 6.7% 1.3%
Communications
4/5/95 Club Med Inc Club Mediterranee SA 67.0% 153.4 41.4% 39.9% 43.8%
-----------------------------------------------------------------------------------
Maximum 88.4% 60.4% 69.6% 68.9%
- -------------------------------------- Mean 65.0% 20.7% 24.2% 27.8%
Source: Securities Data Company. Median 62.6% 15.8% 23.1% 26.6%
Minimum 50.6% 0.4% 0.5% (0.3%)
-----------------------------------------------------------------------------------
</TABLE>
[LOGO OF MERRILL LYNCH APPEARS HERE]
3
<PAGE>
FINANCIAL CONSEQUENCES
================================================================================
Principal Assumptions Behind Financial Consequences
. JRM's management has recently updated its earnings projections based upon
improved industry fundamentals. The following table presents MII's and JRM's
forecasts as previously presented to the Special Committee and as revised
<TABLE>
<CAPTION>
FY2000 FY2001 FY2002
------ ------ ------
Previous
- --------
<S> <C> <C> <C>
MII $1.86 $2.38 $3.25
JRM 1.20 1.46 2.30
Revised
- -------
MII $1.81 $2.58 $3.25
JRM 1.12 1.75 2.31
</TABLE>
. The transaction consideration is assumed to be 100% cash, funded from the
investment portfolio at JRM
. Three cases for the goodwill amortization period are shown: 30, 20 and 15
years. Goodwill is not assumed to be deductible for tax purposes in either
case
. Other principal assumptions are as follows:
(epsilon) Pre-tax combination benefits of $5.0 million per year
(epsilon) Tax rate of 38%
[MERRILL LYNCH LOGO APPEARS HERE]
4
<PAGE>
FINANCIAL CONSEQUENCES
================================================================================
100% Cash Acquisition - 30-Year Goodwill Amortization Period
. The following table sets forth the impact on MII's projected FY2000, FY2001
and FY2002 earnings resulting from various purchase prices for JRM
<TABLE>
<CAPTION>
FY 2000 FY 2001 FY 2002
------- ------- -------
EPS Accretion/(Dilution):
Price per JRM Share
- -------------------------
<S> <C> <C> <C>
$31.00 (12.7%) (2.2%) 3.1%
32.00 (13.9) (3.0) 2.4
33.00 (15.1) (3.9) 1.7
34.00 (16.3) (4.7) 1.1
35.00 (17.4) (5.5) 0.4
36.00 (18.6) (6.3) (0.3)
CFPS Accretion/(Dilution):
Price per JRM Share
- --------------------------
$31.00 (3.1%) 2.0% 5.2%
32.00 (3.5) 1.7 4.9
33.00 (3.9) 1.3 4.6
34.00 (4.4) 0.9 4.3
35.00 (4.8) 0.6 4.0
36.00 (5.2) 0.2 3.7
</TABLE>
[LOGO OF MERRILL LYNCH APPEARS HERE]
5
<PAGE>
FINANCIAL CONSEQUENCES
================================================================================
100% Cash Acquisition - 20-Year Goodwill Amortization Period
. The following table sets forth the impact on MII's projected FY2000, FY2001
and FY2002 earnings resulting from various purchase prices for JRM
<TABLE>
<CAPTION>
FY 2000 FY 2001 FY 2002
------- ------- -------
EPS Accretion/(Dilution):
Price per JRM Share
- -------------------------
<S> <C> <C> <C>
$31.00 (16.3%) (4.7%) 1.0%
32.00 (17.7) (5.7) 0.2
33.00 (19.2) (6.7) (0.5)
34.00 (20.6) (7.7) (1.3)
35.00 (22.0) (8.7) (2.1)
36.00 (23.4) (9.7) (2.9)
CFPS Accretion/(Dilution):
Price per JRM Share
- --------------------------
$31.00 (3.1%) 2.0% 5.2%
32.00 (3.5) 1.7 4.9
33.00 (3.9) 1.3 4.6
34.00 (4.4) 0.9 4.3
35.00 (4.8) 0.6 4.0
36.00 (5.2) 0.2 3.7
</TABLE>
[LOGO OF MERRILL LYNCH APPEARS HERE]
6
<PAGE>
FINANCIAL CONSEQUENCES
================================================================================
100% Cash Acquisition - 15-Year Goodwill Amortization Period
. The following table sets forth the impact on MII's projected FY2000, FY2001
and FY2002 earnings resulting from various purchase prices for JRM
<TABLE>
<CAPTION>
FY 2000 FY 2001 FY 2002
------- ------- -------
EPS Accretion/(Dilution):
Price per JRM Share
- -------------------------
<S> <C> <C> <C>
$31.00 (20.0%) (7.3%) (1.0%)
32.00 (21.6) (8.4) (1.9)
33.00 (23.2) (9.6) (2.8)
34.00 (24.9) (10.7) (3.7)
35.00 (26.5) (11.9) (4.6)
36.00 (28.1) (13.0) (5.6)
CFPS Accretion/(Dilution):
Price per JRM Share
- --------------------------
$31.00 (3.1%) 2.0% 5.2%
32.00 (3.5) 1.7 4.9
33.00 (3.9) 1.3 4.6
34.00 (4.4) 0.9 4.3
35.00 (4.8) 0.6 4.0
36.00 (5.2) 0.2 3.7
</TABLE>
[LOGO OF MERRILL LYNCH APPEARS HERE]
7
<PAGE>
JRM Discussion
================================================================================
Talking Points
. In addition to the appropriate offer price for the publicly-held JRM shares,
the other issues to discuss with the representatives of JRM Independent
Committee include:
(epsilon) Form of consideration (cash vs. stock)
- Possibility of a MDR shareholder vote if more than 20% of MDR's
existing shares are issued
(epsilon) Timing and mechanics of the transaction
- Merger: 4 months
- Tender: 30 days
(epsilon) Open points on merger agreement, including the termination fee and
majority of the minority provisions
(epsilon) Social issues (board seats for JRM, etc.)
. Assuming an understanding on price and other important issues can be reached,
it would be necessary to determine the next steps that need to be taken to
finalize an agreement with the Independent Committee of JRM
. In the case that no agreement is reached, next steps for MDR's Special
Committee may include:
(epsilon) Further discussions with JRM Independent Committee
(epsilon) Termination of discussions and subsequent offer to buy JRM shares
through a tender offer/open market purchases
(epsilon) Termination of discussions and maintenance of status quo
[LOGO OF MERRILL LYNCH APPEARS HERE]
8
