Amec Foster Wheeler has agreed to a £2.2bn takeover by Wood Group in a deal in which brings together two of the UK’s largest energy services companies.
Wood Group hopes to cut £110m in costs out of the combined business, which will provide services to oil as well as also gas, chemicals as well as also mining sectors.
The deal will create a company using a combined value of about £5bn.
Shares in Amec soared 18.3% to 579p, while Aberdeen-based Wood Group’s shares climbed 6.8%.
Wood Group will be offering 564p a share for its British rival.
The deal has emerged at a difficult time for both businesses amid continued oil cost volatility.
Amec was due to raise £500m through a rights issue next week, although in which has right now been suspended.
The money was to be used to cut its £1bn debt as well as also fund a reorganisation of the company, which was formed through the merger of Amec as well as also the US’s Foster Wheeler three years ago.
Amec also announced on Monday in which last year’s revenues fell 8% to £5.4bn after “continuing weakness” within the oil as well as also gas market offset strong performances elsewhere in its business. in which weakness was also partly responsible for a fall in profit to £318m via £374m.
In February, Wood Group revealed a revenues had fallen 16% last year to $4.9bn, while pre-tax profit halved to $66m.
The company has been shedding staff as well as also last year the item cut around 18% of its employees.
Under the terms of the deal, Amec shareholders will end up with 44% of the larger group. The management of Wood Group – chief executive Robin Watson, finance chief David Kemp as well as also chairman Ian Marchant – will continue in their roles following completion of the deal.
Wood Group chairman Ian Marchant said: “The combination extends the scale as well as also scope of our services, deepens our existing customer relationships, facilitates further development of our technology-enabled solutions as well as also broadens our end market, geographic as well as also customer exposure.
“Delivering significant sustainable synergies will also result in a leaner as well as also more competitive combined group, creating value for shareholders.”