Wood Group PLC has agreed to acquire the entire issued and to be issued share capital of fellow oil field services firm Amec Foster Wheeler PLC in a deal valued at $2.7 billion.
Ian Marchant, Wood Group chairman, said the merger will create “a global leader in project, engineering, and technical services delivery across a range of industrial sectors.”
Marchant explained that the resulting firm will be “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.” The move leverages combined asset life cycle services across project delivery, engineering, modifications, construction, operations, maintenance, and consulting activities, he said.
Wood Group and Amec Foster Wheeler believe the new company will be able to achieve cost synergies of at least £110 million/year, or $134 million/year, on a recurring basis.
Robin Watson and David Kemp, currently Wood Group’s chief executive officer and chief financial officer, respectively, will continue in those roles for the combined firm. Marchant will continue as chairman.
The merger has been unanimously recommended by the boards of Wood Group and Amec Foster Wheeler. It will result in Amec Foster Wheeler shareholders owning 44% of the share capital of the combined firm based on the existing ordinary issued share capital of Wood Group and the fully diluted share capital of Amec Foster Wheeler.
Based on a Mar. 10 closing price of £7.52/Wood Group share, the terms of the merger value the issued and to be issued share capital of Amec Foster Wheeler at £2.225 million, or around $2.7 billion.
Amec Foster Wheeler itself is the result of the merger of AMEC PLC and Foster Wheeler AG during 2014 just as crude oil prices were beginning their dive from $100/bbl. Other prominent oil field services combinations since that time include General Electric Co. and Baker Hughes Inc., Schlumberger Ltd. and Cameron International Corp., and Technip SA and FMC Technologies Inc. (OGJ Online, Oct. 31, 2016).
Contact Matt Zborowski at [email protected].
