Wood Group has offered to divest most of Amec Foster Wheeler's oil and gas business in the UK North Sea to address competition concerns over its merger with the latter.
The £2.2bn takeover by Wood Group had run into trouble after the UK’s Competition and Markets Authority (CMA) had launched an investigation earlier this month to look into alleged breaching of competition laws.
Wood Group’s proposed merger is also expected to have an impact on jobs in the North Sea which have been declining as such owing to the crash in oil price in 2014, as reported by The Financial Times.
The CMA had invited relevant parties to comment on the Wood Group-Amec transaction to get feedback in its phase 1 investigation on whether the subsequent merger would drastically lessen competition in the UK for goods or services.
To get the nod from the competition watchdog, Wood Group has proposed to divest Amec’s assets that had earned revenue of £740m last year, as reported by The Telegraph. Amec’s total revenue generated in 2016 was £5.4bn.
It was in March that the oil services company Wood Group had announced to have signed a definitive agreement to take over its UK-based rival.
The merger was proposed by Wood Group in line with its strategy to become a leading player in project, engineering and technical services delivery across multiple industrial sectors.
If the transaction meets no further obstacles, then it is likely to be closed in the second half of the year to create a combined entity that is expected to deliver significant cost and revenue synergies.
As per the transaction terms, Amec Foster Wheeler shareholders will get 0.75 new Wood Group shares for each share they hold. Upon creation of the combined entity, the Amec shareholders will be entitled to hold a stake of 44% while the remainder to be held by the Wood Group.
Image: Head office of Amec Foster Wheeler in London. Photo: courtesy of Basher Eyre/Wikipedia.