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Wood Group to the rescue.

Wood Group, the Aberdeen-based oilfield services company, has launched a £2.2bn takeover of its troubled rival Amec Foster Wheeler.

The offer, of 0.75 new Wood Group shares for each existing Amec Foster Wheeler share, has been recommended by Amec’s board.

Shares in Amec soared 20.5 per cent at the start of trading, to 591p. Wood Group shares climbed 6.5 per cent, to 801p.

The offer comes a week before Amec, which has been trying to recover from an ill-timed takeover in 2014, before the slump in oil prices, was due to go cap in hand to shareholders to raise money through a £500m rights issue to bolster its balance sheet.

Amec has £1bn of debt and has been shedding assets in order to pay it down.

John Connolly, Amec Foster Wheeler chairman, said the takeover offer by Wood Group “adds to the standalone prospects of the company”.

Wood Group said that, based on its closing share price on Friday of £7.52, the offer represented £5.64 per Amec share – a premium of 15.3 per cent to Amec’s closing share price of £4.89 before the weekend.

Amec’s shareholders will own around 44 per cent of the combined group.

Ian Marchant, Wood Group chairman, said:

The combination represents a transformational transaction for Wood Group, which accelerates our strategy and creates a global leader in project, engineering and technical services delivery across a range of industrial sectors. The Combination extends the scale and scope of our services, deepens our existing customer relationships, facilitates further development of our technology-enabled solutions and broadens our end market, geographic and customer exposure.

Copyright The Financial Times Limited 2017. All rights reserved.
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