AMEC's Takeover of Foster Wheeler Gets Serious

AMEC to Buy Foster Wheeler AMEC's Takeover of Foster Wheeler Gets Serious

14.02.2014Editor: Dominik Stephan

AMEC's attempt to take over Swiss based Foster Wheeler gets serious: Both companies have entered the stage of definitive agreement, under which AMEC will make an offer to acquire all shares of its competitor for 0.8998 shares of AMEC stock and US $ 16 in cash each.

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British AMEC wants to acquire engineering competitor Foster Wheeler
(Picture: Alex Griffiths/Photo by courtesy of AMEC)

Zug/Switzerland – The planned acquisition, already discussed in January would see AMEC becoming a global € 5 billion engineering heavyweight. AMEC is especially intetrested in Foster's downstream capabilities and regional presence in South America and the Middle East.

British AMEC wants to acquire engineering competitor Foster Wheeler (Picture: Alex Griffiths/Photo by courtesy of AMEC)

Based on AMEC's stock price of £ 10.92 per share (as of February 12, 2014) and an exchange rate of £/$1.658, the proposed transaction would value each Foster Wheeler share at approximately US $ 32.69 and the fully diluted share capital of Foster Wheeler at approximately US $3.3 billion. This represents a premium of approximately 13.8 % to US $ 28.73, compared to the company's stock value of November 2013 when first rumours of a proposed takeover reached the markets.

AMEC Aims for Strong Presence in growth Markets

In addition, Foster Wheeler expects to pay a one-time dividend of US $ 0.40 per share prior to, and not conditional on, the closing of the offer. Kent Masters, President and Chief Executive Officer of Foster Wheeler, said, “Both companies have strategies that are highly focused on growth, and our combination will help deliver on Foster Wheeler’s key strategic objectives: establishing material positions in upstream and minerals and metals, building positions in growth geographies and extending our services offering.”

After the transaction, this new union of giants is expected to have a strong position in offshore and onshore upstream oil and gas, gas monetization, refining and chemicals, minerals and metals, power and clean energy, environment & infrastructure and pharmaceuticals, company speakers explained. The new company would have an expanded, geographically diverse global presence, with offices and projects in more than 50 countries and more than 40,000 employees.

Revenues of US $ 10 Billion Expected for Acquisition

With revenues of of approximately US $ 10 billion and backlog of approximately US $ 10 billion, AMEC and Foster Wheeler would become a major global engineering and technology provider. Under the terms of the transaction, Foster Wheeler’s existing shareholders will own approximately 23 % of the combined company and two of the Company’s non-executive directors are expected to join AMEC’s board as non-executive directors. Transaction is expected to close in the second half of 2014.

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