Australian engineering firm WorleyParsons will pay $303 million to expand into the UK North Sea petroleum market.
That is the price tag for WorleyParsons to purchase AFW UK Oil & Gas, which provides engineering and construction services on the UK continental shelf.
To fund its British acquisition, the Australian company will issue new shares as part of a $322 million capital raising (through a one-for-10 entitlement offer and existing debt facilities).
Around 24.8 million new shares will be issued at $13, which is an 8.7 per cent discount to WorleyParsons’ closing price last Friday ($14.24).
“We are excited to enter the UK North Sea market as a leading player based in Aberdeen,” WorleyParsons chief executive Andrew Wood said.
In a statement to the ASX, the Australian engineering group said the deal would accelerate its strategy to build “a world class global maintenance, modifications and operations (MMO) capability”.
AFW has five offices in the UK and two in the Middle East.
WorleyParsons expects the AFW deal will be complete by the end of October, and that its new acquisition would contribute to earnings-per-share positive in the first year of ownership.
In the meantime, WorleyParsons has entered a trading halt while it tries to raise capital to fund the deal.
Sale ‘might’ address UK competition concerns
The AFW assets are being offloaded by its vendor, British oil and gas company Amec Foster Wheeler, to address “competition concerns” in the UK market.
Amec is currently in the process of being taken over by multinational energy company, the John Wood Group, for $3.7 billion.
However, the UK’s Competition and Markets Authority (CMA) has raised concerns about the proposed merger.
The CMA said in August the Amec-Wood merger could lead to competition concerns on the UK continental shelf (in the supply of engineering and construction services, and operation and maintenance services).
But later that month, the regulator said that if Amec sells most of its upstream offshore oil and gas assets, that “might be acceptable” as a pre-condition for the Amec-John Wood merger to proceed.