British energy engineering group AMEC will take over Swiss-headquartered rival Foster Wheeler in a $US3.3 billion ($A3.67 billion) deal that will strengthen its position in the oil sector and high-growth regions.
AMEC said it had received the support of Foster Wheeler's management and had signed a definitive agreement to acquire all of the company's stock in exchange for cash and AMEC stock.
"The combination positions us across the whole oil and gas value chain, provides scale in our growth regions and is expected to be double-digit earnings enhancing in the first twelve months," AMEC chief executive Samir Brikho said in a statement.
AMEC said Foster Wheeler will add mid and downstream capabilities to AMEC's focus on upstream oil and gas projects.
The acquisition will also double revenues in fast-growing regions, and lead to at least $US75 million in cost synergies, plus tax savings.
The deal requires the approval of investors holding 80 per cent of Foster Wheeler's share capital, and is expected to close in the second half of this year.
The deal offers Foster Wheeler shareholders about 50 per cent in AMEC stock and 50 per cent in cash, although they can seek to adjust the amounts.
The $US16 per share to be paid to Foster Wheeler investors will be financed from cash resources and new debt financing.
With Foster Wheeler investors also receiving 0.8998 AMEC shares for each of their shares, they will hold 23 per cent of the company after the transaction.
Shareholders in the Zug-based company are also to get an exceptional dividend of 40 cents per share before the operation.
Foster Wheeler said the $US3.3 billion deal represents a premium of 13.8 per cent over the price of its shares on November 26, the date on which information about a possible merger with AMEC began to circulate.
AMEC shares jumped 3.6 per cent to 1,112.00 pence in afternoon trading while the FTSE-100 was down 0.65 per cent overall.
