US energy contractor McDermott International has announced it will sell off its storage tanks and US pipe fabrication businesses, the value proposition of which it says has been compromised ever since its acquisition of Chicago Bridge & Iron (CB&I).

After a review of its business structure, McDermott has determined that its storage tanks and US pipe manufacturing units are offering limited pull-through or cross-selling opportunities and, in some cases, their ability to pursue third-party work aggressively can be hampered by internal considerations.

As a result, McDermott is seeking buyers for both the businesses.

McDermott’s rationale behind buying CB&I, in May this year, was to build its capabilities beyond the offshore segments, and create a vertically integrated onshore and offshore engineering and construction company that will work on a healthy order book of projects, as well as be well-positioned to win new projects both in the upstream and downstream sectors, particularly in the Middle East.

“The tank business in particular is known as a world leader in its served markets," McDermott’s president and CEO David Dickson is quoted as saying in a press release. "Our intent would be to seek the kinds of owners who would value the significant long-term growth potential of each business and who would thus provide attractive prospects for employees and customers.”

The two businesses, which McDermott expects to sell separately, had combined 2017 revenues of about $1.5bn, 2017 backlog of approximately $1.4bn and some 5,350 employees.

McDermott anticipates proceeds in excess of $1bn and is targeting completion of the transactions during 2019. It expects to use the majority of the proceeds to reduce the debt under its $2.25bn term loan.

McDermott will retain its offshore fabrication yards located worldwide, including in Jebel Ali, Dubai and Dammam, Saudi Arabia.