Wood Group-Amec FW merger hits stumbling block

A merger between two UK oilfield services companies, Wood Group and Amec Foster Wheeler, has hit a stumbling block at home after a competition authority said the merger gives rise to concerns. 
To remind, Wood Group launched the offer for Amec Foster Wheeler back in March. Under the offer, each Amec Foster Wheeler shareholder would receive for each Amec Foster Wheeler share 0.75 new Wood Group shares.
The offer was approved by shareholders of both companies in June, but remained subject to relevant clearances from competition authorities in certain countries where both companies operate.
According to Wood Group’s statement on Wednesday, the UK’s Competition and Markets Authority (CMA) has determined that the acquisition of Amec Foster Wheeler by Wood Group gives rise to competition concerns in the supply of engineering and construction (E&C) services and operation and maintenance (O&M) services on the UK continental shelf.
Recognizing the potential for this type of decision, Wood Group noted it had previously made a proposal to the CMA of a remedy as outlined in the Wood Group Prospectus and the Amec Foster Wheeler scheme document, each dated May 23, 2017.
The proposed remedy was in respect of assets and operations of Amec Foster Wheeler that represent the majority of Amec Foster Wheeler’s UK upstream oil and gas business located in the UK and serving UK customers, excluding its commissioning business, qedi.
Wood Group emphasized it has been working constructively with the CMA to progress consideration of this remedy. Wood Group will now formally submit the remedy proposal to the CMA and the authority will provisionally decide whether this remedy proposal is sufficient by August 16, 2017, at the latest, with its final decision due by October 11, 2017.
Both Wood Group and Amec Foster Wheeler consider that the proposed remedy is sufficient to address the CMA’s competition concerns and to obtain clearance, Wood Group said. The M&A process for this remedy is already at an advanced stage.
Amec Foster Wheeler started a formal marketing process in May, which has attracted interest and is progressing well. As a result, Wood Group and Amec Foster Wheeler continue to expect the combination to complete in the fourth quarter of 2017.
Commenting on today’s announcement, Robin Watson, Chief Executive of Wood Group said “Both sets of shareholders overwhelmingly supported the proposed combination and we continue to believe that the proposed remedy will be sufficient to obtain clearance from the CMA. We remain fully committed to completing the transaction in quarter four this year.”
Commenting on the CMA’s announcement, Jon Lewis, Chief Executive Officer at Amec Foster Wheeler, said: “Since the announcement of the remedy offer in May, Amec Foster Wheeler has made good progress marketing its UK upstream oil and gas business to a range of potential buyers and is continuing the divestment process. We remain committed to closing the transaction in quarter four this year.”
 

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