Wood group swallows AMEC Foster Wheeler

Aberdeen-based Wood Group is to merge with AMEC Foster Wheeler in a deal which effectively sees AMEC FW taken over by the larger contractor. The deal creates a £5bn company that will provide services to the oil and gas, other energy, chemicals, and mining industries.

The board of AMEC FW recommended the merger to shareholders after a troubled period for company. Formed three years ago in the merger of UK firm AMEC with American contractor Foster Wheeler, it has £1bn worth of debt and has announced falls in both revenues and profits owing to weakness in the crucial oil and gas market. Wood Group, which is the larger of the two, also announced weak results last month, with revenues down 16 per cent and profits halved.

The merger is an all-shares deal, with no cash changing hands. AMEC FW will comprise 44 per cent of the new company, with Wood Group’s chairman and chief executive, Ian Marchant and Robin Watson, remaining in their roles. AMEC FW has announced the suspension of a planned stock offer to raise £500m.