UK oil services firm Wood Group is set to take over Amec Foster Wheeler after an agreement was reached between the two companies in a deal worth £2.225 billion ($2.71bn).
Amec Foster Wheeler shareholders will receive 0.75 new Wood Group shares for each of their Amec Foster Wheeler shares, giving Amec Foster Wheeler shareholders a holding of around 44% in the new combined group.
The two companies said the combination will see opportunities for revenue synergies and have identified cost synergies of at least £110 million ($134m). Ominously for workers, the takeover announcement said that synergies included headcount reductions although it was yet to identify how and where headcount reductions will be implemented.
Robin Watson and David Kemp, currently CEO and CFO of Wood Group, will continue their roles in a combined group while four members of the Amec Foster Wheeler board will join the new board.
Ian Marchant, chairman of Wood Group, commented: “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.
“The combination will create an asset-light, largely reimbursable business of greater scale and enhanced capability, diversified across the oil & gas, chemicals, renewables, environment & infrastructure and mining segments.”
The takeover has been unanimously recommended by both boards and completion is expected during the second half of 2017.