The UK’s two largest energy services companies, Wood Group and Amec Foster Wheeler, are to merge following a deal agreed by both groups.
The £2.2bn deal will in effect be an all share takeover, with Amec shareholders ending up with 44% of the combined group shares.
The new group should have a combined value of about £5bn and merging could help reduce costs by around £110m a year, through potential synergies and leaner ways of working.
Shares in Amec soared 14.7% to 561p, while Aberdeen-based Wood Group’s shares climbed 4.4% to 785p.
Wood Group is offering 564p a share for its British rival.
Cost cutting measures
Wood Group revealed in February that revenues had fallen 16% last year to $4.9bn, while pre-tax profit halved to $66m.
The company has been reducing staff and last year it cut about 18% of its employees.
Chief Executive Robin Watson, Finance Chief David Kemp and Chairman Ian Marchant will continue in their roles after the deal is completed.
‘Leaner and more competitive’
Ian Marchant said: “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.
“Delivering significant sustainable synergies will also result in a leaner and more competitive Combined Group, creating value for shareholders.”