Engineering firm Amec Foster Wheeler is to combine with rival Wood Group in a £2.2bn takeover.
The merger will give Amec Foster Wheeler shareholders a 44% share in the larger group. It was unanimously recommended to shareholders by board members of both companies and will create company with a combined value of around £5bn. Savings are expected to reach £110M per year.
Revenue at Amec Foster Wheeler was down 8% in 2016, as continuing weakness in the oil and gas market took effect.
“The combination will create an asset-light, largely reimbursable business of greater scale and enhanced capability, diversified across the oil and gas; chemicals; renewables; environment and infrastructure; and mining segments,” said Wood Group chairman Ian Marchant.
Amec Foster Wheeler was due to raise £500M through a rights issue next week (21 March), but has suspended it in light of the merger agreement.
“Since the arrival of Jonathan Lewis as chief executive, the executive management team of Amec Foster Wheeler has made significant progress towards the transformation of the business. This has been achieved through cost reduction initiatives, the disposal of non-core assets and a reorganisation of the business,” said Amec Foster Wheeler chairman John Connolly.
“The Amec Foster Wheeler board have fully supported the revised strategy and the preparations to deliver the appropriate balance sheet to support the standalone prospects of Amec Foster Wheeler.”
Amec Foster Wheeler also announced today that it has secured a new £125M deal to provide long-term support to EDF Energy Nuclear Generation.
Current projects Amec Foster Wheeler is working on include the environmental impact modelling and assessment to support a development consent order for the proposed Moorside nuclear power station in Cumbria.