UK engineering giant AMEC has given its provisional agreement to the terms of a proposed $3.2 billion cash and shares deal for the acquisition of US rival Foster Wheeler.
Should the deal succeed, it will combine two of the biggest players in the British oil and gas sector, resulting in the creation of a new company valued at around 5 billion pounds (approx. US$8.2 billion).
The two companies have already collaborated on a project in the Middle East, obtaining consultancy contracts for the construction of a refinery in Kuwait.
London-listed AMEC has operations in more than 40 countries around the globe, deriving approximately half of its turnover from North America, a third from Europe, and the remaining 12 per cent from other countries. The company has a total of more than 29,000 employees worldwide, and has a strong focus on servicing oil and gas markets.
Foster and Wheeler, a NASDAQ-listed company headquartered in Clinton, New Jersey, focusses on the engineering, procurement and construction (EPC) sector as well as electrical power equipment industry. Its Global Engineering and Construction Group specializes in the design and construction of infrastructure for the oil and gas sector, LNG and gas-to-liquids, as well as refining.
The company holds licenses for a large number of petroleum and petrochemical processes and, with 13,000 staff in over 30 countries, is a key employer of chemical engineers.
AMEC said a merger with Foster Wheeler would increase the company's revenues more than twofold in fast-growing regions such as Latin America and would expand its client base and upgrade its oil and gas capabilities in the downstream sector.
AMEC chief executive Samir Brikho has described the potential merger as "financially and strategically attractive," as well as a "compelling proposition for our shareholders, customers and employees."
The issuance of a firm offer by AMEC remains contingent upon the satisfaction of a number of pre-conditions, with each party to the deal now scheduled to conduct due diligence.
AMEC has endeavoured of late to expand the scope of its global operations, recently launching a failed takeover bid for FTSE-listed engineering consultancy Kentz for a consideration of around 700 million pounds.