Companies
UK-Based Wood Group Would Buy AMEC FosterWheeler for $2.7B
Latest deal in ailing oil and gas sector is transformational for buyer, firm says.
UK energy sector contractor Wood Group says it will seek to acquire rival Amec Foster Wheeler, also UK based, for about $2.7 billion, creating a new global construction giant as the oil and gas sector struggles to recover. Amec linked with US-based Foster Wheeler in 2014 just before the oil price crash.
John Connolly, Amec Foster Wheeler chairman, said the takeover offer “adds to the standalone prospects of the company,” according to The Financial Times. Ian Marchant, Wood Group chairman, called the deal "transformational" for the firm.
Toronto-based construction sector analyst Maxim Sytchev says if executed, the deal would be the largest involving industry-sector firms since AECOM acquired URS Corp. in 2014 for more than $5 billion.
He says the deal envisions cost "synergies" between the two firms of about $134 million, noting that AMEC Foster Wheeler oil and gas related revenue has made up 42% of its total since 2014, but that profit in that area is down 33% in the same period.
Robin Watson and David Kemp, CEO and chief financial officer of Wood Group respectively, will remain in these roles, the company says. Four members of Amec’s board will join the new board; they were not identified. Also not clear is whether Amec Foster Wheeler CEO Jonathan Lewis, who joined the firm only last June from a senior role at Halliburton, would stay with the new combined firm and in what capacity.
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