McDermott International (NYSE: MDR) shares were down 11% in early morning trading on Dec. 19 before crawling back up to a 7.8% loss as of lunchtime. The whipsawing price followed the company’s announcement Dec. 18 that it and CB&I (NYSE: CBI) have agreed to combine in an all-stock transaction.

McDermott offered 2.47221 of its shares for every CB&I stock held, a 3% premium to the company’s closing price. The offer translates to an equity value of $1.86 billion based on CB&I’s outstanding shares, according to calculations by Reuters.

Upon completion of the transaction, McDermott shareholders will own about 53% of the combined company on a fully diluted basis. CB&I shareholders will own about 47%.

CB&I’s shares have lost about 44% of their value in 2017, and the company has missed analysts’ estimates on revenue and profit for the last four quarters. The company has been struggling since the crash in oil prices and has been offloading its assets, a Reuters report indicated.

Meanwhile, McDermott’s stock benefited from a slew of contract wins, including from Saudi Aramco, in the Middle East. The company’s shares are up about 3% this year, according to Reuters.

CB&I conducts about 75% of its business in the U.S. while most of McDermott’s business is outside the U.S.—it is Saudi Aramco’s largest offshore contractor.

During a conference call Dec. 18, McDermott President and CEO David Dickson said the motivation for the merger was the opportunity to be more competitive as a fully vertically integrated company. He touted the combined company as a $10 billion global onshore-offshore engineering, procurement, construction and installation provider “with a market leading technology portfolio.”

He said the two companies’ operations capabilities are “highly complementary” and that they are positioned to “capitalize on attractive trends, thriving growth in our markets.”

“This combination gives us a presence onshore and offshore, upstream, downstream and power market,” he said.

An end-to-end offering illustration of the McDermott and CB&I combination company. (Source: McDermott International)

Dickson, who will head the combined company as president and CEO, added the move will ensure a “more consistent, predictable performance through market cycles.”

Dickson said both companies are heavily focused on lump-sum contracts and large construction projects. “If I were to look at this as a combination, culturally this is one of the better ones I’ve seen,” he said.

CB&I President and CEO Pat Mullin, who will remain with the combined company for a transition period, said his company and its board had weighed strategic options, including its previously announced intention to sell its technology business. “It became very clear over time that this was by far the best outcome for various groups of stakeholders,” he said during the conference call. “The key thing to assure you of is that comparison was done exhaustively.”

Following completion of the transaction, the combined company will be headquartered in the Houston area. Stuart Spence, current executive vice president and CFO of McDermott, will be executive vice president and CFO of the combined company. Operational leadership will include representatives from both companies.

The board of directors will be comprised of 11 members, including 10 independent directors and Dickson. Five of the independent directors will come from McDermott, and five will come from CB&I. Gary P. Luquette, non-executive chair of the McDermott board, will serve as the combined company’s non-executive chairman.

The combination involves a series of transactions under Dutch law resulting in the sale of CB&I’s entire business as well as an exchange offer by McDermott in which CB&I’s shareholders can tender their shares. Both the sale and the exchange offer will result in the same consideration for CB&I’s shareholders (subject to tax consequences, including potential Dutch withholding taxes in respect of shareholders that do not participate in the exchange offer).

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