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Foster Wheeler is a US Nasdaq listed company but its operational headquarters are in Reading. Both companies are major engineering, procurement & construction (EPC) contractors in the energy and oil & gas sectors.
Amec is proposing to pay £968m in cash and the remainder in shares that would give Foster Wheeler shareholders 23% of the enlarged company.
Amec said that combination of the two businesses was “a compelling proposition for all shareholders”. It would position Amec to serve across the whole oil and gas value chain, adding mid and downstream capabilities to Amec's existing upstream focus.
It would also improve Amec’s footprint in growth regions such as Latin America.
Amec chief executive Samir Brikho said: "The combination of our two businesses, Amec and Foster Wheeler, would be financially and strategically attractive. As well as positioning us across the whole oil & gas value chain and providing scale in our growth regions, we would expect double-digit earnings enhancement in the first 12 months. I believe it would be a compelling proposition for our shareholders, customers and employees."
The making of a firm offer remains subject to a number of pre-conditions, including completion of due diligence by both parties and further detailed negotiations.
Foster Wheeler has agreed not to solicit alternative proposals until 22 February 2014 by which time it is expected that definitive agreements will be entered into.
If all goes smoothly, completion is anticipated in the second half of 2014.
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