Amec, Foster Wheeler agree merger terms
Amec offers $1.9bn for Foster Wheeler shares, $1.6bn of which is cash
UK-based engineering consultancy Amec has agreed provisional terms for a deal that will see it buy-out competitor Foster Wheeler in a deal worth almost $1.9bn.
The deal would comprise a cash offer of $1.6bn for Foster Wheeler's shares, with the remainder being made up through the offer of new Amec shares, which would lead to Foster Wheeler shareholders owning 23% of the enlarged group.
The offer price is a 12.8% premium on the $28.73 that Foster Wheeler's shares were trading at on the Nasdaq market on the day before the first news reports of a potential deal broke on November 23, 2013.
Amec said that if completed on current terms, the deal should lead to a double-digit rise in earnings within its current calendar year. It argued that it could make cost savings of up to $75m a year as a result of a merger and would strengthen its profile in the oil & gas market.
Both firms have a strong presence in the Middle East and have both recently signed consultancy deals worth $500m each to build the new Az-Zour refinery and clean fuels project in Kuwait.
Under the terms agreed, Foster Wheeler has agreed not to solicit any offer from other potential bidders until 22 February, by which time Amec said definitive terms should be largely complete, although the deal is not likely to complete until the second half of 2014.
Amec chief executive Samir Brikho said: "The combination of our two businesses would be financially and strategically attractive."
Amec's shares are listed on the London Stock Exchange.