Amec in Deal for Foster Wheeler

Monday, January 13, 2014 @ 06:01 PM gHale

British oil and gas engineering firm Amec will pay $3.13 billion to pick up Swiss-based rival Foster Wheeler.

Amec said the deal would increase its position and help more than double revenues in growing markets such as Latin America and the Middle East.

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The firm, which provides services and equipment for the oil and gas, mining, nuclear and renewable energy sectors, said the acquisition would also add oil and gas transport and refining capabilities to its existing extraction facilities.

Larger European contractors have been looking for acquisitions which they believe would help them expand into new regions such as Africa and newer areas such as liquefied natural gas (LNG) and shale.

Amec expects a 10 percent boost in earnings in the first 12 months after the acquisition, with returns on its investment to exceed the cost of capital in the second year.

It said the deal would also create annual cost savings of at least $75 million.

“The combination of our two businesses, Amec and Foster Wheeler, would be financially and strategically attractive,” Chief Executive Samir Brikho said.

Foster Wheeler provides engineering services and power generator equipment to the LNG, oil and gas and petrochemical sectors.

Foster Wheeler will hold shares in Amec after the deal’s completion representing 23 percent of the enlarged company, and Amec will seek a U.S. listing in connection with the transaction, the companies said.

The deal should close in the second half of this year.

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