AMEC plc (OTCMKTS:AMCBY) (LON:AMEC) announced today that it had signed a deal to acquire rival O&G engineering firm Foster Wheeler AG (NASDAQ:FWLT). According to the statement released Monday, Swiss-based Foster Wheeler was acquired by Amec in a deal involving around $1.4 billion in cash and approximately $1.8 billion in new Amec shares. The deal will increase Amec’s market cap by nearly 50% and increase their footprint in the O&G services sector, especially in rapidly growing Latin America.
The deal is not yet final, however. The companies are still negotiating a final merger agreement, and the acquisition requires approval by Foster Wheeler AG (NASDAQ:FWLT)’s board and by shareholders and regulators. Foster Wheeler has also agreed in good faith to not consider other deals until Feb. 22.
According to AMEC plc (OTCMKTS:AMCBY) (LON:AMEC) CEO Samir Y. Brikho, combining the two engineering services companies “would be financially and strategically attractive. I believe it would be a compelling proposition for our shareholders, customers and employees.”
Foster Wheeler AG (NASDAQ:FWLT) issued a cautionary statement. “There can be no assurances that any transaction will ultimately be agreed between Foster Wheeler and AMEC plc (OTCMKTS:AMCBY) (LON:AMEC), or what the definitive and binding terms of any such transaction would be.”
Foster Wheeler acquisition details
AMEC plc (OTCMKTS:AMCBY) (LON:AMEC) is planning to finance the acquisition through a combination of cash on hand and new debt. The deal is likely to be finalized in 2H 2014. When finalized, Foster Wheeler shareholders will own about 23% of the new company.
Two nonexecutive directors from Foster Wheeler AG (NASDAQ:FWLT) are also slated to join AMEC plc (OTCMKTS:AMCBY) (LON:AMEC)’s board as part of the transaction. The deal also calls for Foster Wheeler to issue a dividend of 40 cents a share. Goldman Sachs Group Inc (NYSE:GS) and JPMorgan Chase & Co. (NYSE:JPM) are advising Foster Wheeler in the negotiations, and Freshfields Bruckhaus Deringer is providing legal advice. Bank of America Merrill Lynch is advising AMEC.