The £2.2 billion ($2.7 billion) takeover of Amec Foster Wheeler by rival engineering giant Wood Group plc is on course to be completed next month following approval from the UK’s competition watchdog.
The Competition and Markets Authority (CMA) launched an investigation in June over concerns that the deal would harm competition in the supply of engineering and construction services, and operation and maintenance services. This week, it announced that Wood Group’s plan to sell most of Amec’s North Sea businesses in these sectors was acceptable.
“It is crucial that competition is maintained in this major UK industry,” explained Kate Collyer, deputy chief economic adviser at the CMA. “We have therefore conducted a thorough investigation into this merger, and believe that the sale of Amec Foster Wheeler’s assets will address our concerns and ensure that customers in the North Sea continue to be able to obtain competitive bids.”
She added: “In this case, the CMA worked with the companies on a ‘twin-track’ approach, engaging with them on shaping remedies that might mitigate competition concerns, if any were found, whilst still investigating whether such concerns arose. This enabled us to promptly reach a final view on the proposed remedy after competition concerns were identified, helping to reduce uncertainty about the potential impact of the merger for customers within this industry.”
One of the world’s largest engineering groups
The deal will create one of the world’s largest engineering groups servicing the power, oil, gas, mining and chemicals sectors. Amec will have a 44% share in the new company. The proposed merger was unanimously supported by the shareholders of both companies.
Robin Watson, chief executive of Wood Group, welcomed the CMA’s clearance: “Since we announced the deal in March, both parties have maintained a relentless focus on keeping on schedule. Today’s earlier-than-anticipated decision from the CMA allows us to move forward with pace, and we are very confident of completing the acquisition of Amec Foster Wheeler in October.”
Jon Lewis, chief executive officer of Amec Foster Wheeler, added: “We have made significant progress marketing Amec Foster Wheeler’s UK upstream oil and gas business to a range of high-quality bidders, which has helped to ensure that we will close the transaction in October, bringing the many benefits of the combined company to our clients, colleagues and shareholders.”
Tough first half year for Wood Group
Wood Group has had a tough first half of 2017. Last month, Industrial Info reported on the company’s 87% decline in profits for the first half of 2017 compared to the same period in 2016. Profits fell from $45 million in first-half 2016 to $6 million in the corresponding period of 2017, but the company maintained that its balance sheet will improve in the second half of the year thanks to ongoing projects and its acquisition of Amec.
Source: Industrial Info Resources – 19 September 2017