Wood Group hails progress towards £2.2bn Amec takeover

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Wood Group hails progress towards £2.2bn Amec takeover

The competition watchdog is considering a proposal by Amec Foster Wheeler and Wood Group to auction off a clutch of assets as the oil and gas groups try to win approval for their £2.2 billion merger.

Wood Group employs 29,000 people while Amec has 35,000 workers and the new entity would be valued at around £5 billion. Since then, the CMA has been considering proposals to overcome competition concerns regarding the transaction.

The regulator cited concerns over the supply of engineering and construction services and operation and maintenance services on the United Kingdom continental shelf.

The CMA said there were "reasonable grounds" for believing this move "might be acceptable", and said today it intends to open a public consultation on the offer in due course.

Earlier this month Amec Foster said it was preparing its North Sea operations for sale in response to the CMA's competition concerns in the supply of engineering and construction services, and operation and maintenance services in the UK.

The potential in-depth investigation by the CMA comes amid an ongoing investigation into Amec Foster Wheeler by the UK Serious Fraud Office on the past use of third parties and possible bribery, corruption and related offences.

It is crucial that competition is maintained in this major United Kingdom industry.

Numis Securities Ltd restated their buy rating on shares of Amec Foster Wheeler PLC (LON:AMFW) in a report published on Friday.

John Wood said the divestment from Amec Foster Wheeler's United Kingdom upstream assets would exclude its commissioning business, qedi, which provides completion and commissioning services across the project life cycle for large capital expenditure projects and operational assets. Macquarie raised shares of Amec Foster Wheeler PLC to an "outperform" rating and upped their price objective for the company from GBX 610 ($7.92) to GBX 725 ($9.41) in a report on Wednesday, May 24th.

When announcing the deal in March, Aberdeen-based Wood Group said it will result in "significant cost and revenue synergies" of at least £110 million a year.

Amec Foster Wheeler plc operates across the oil and gas value chain from production to refining, processing and distribution of derivative products in oil and gas, mining, clean energy, and the environment and infrastructure markets.

Wood Group chairman Robin Watson described the CMA's announcement as an "important milestone", adding that it gave the firm "further confidence in our ability to complete the transaction in quarter four this year".

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