Oil services company Wood Group agrees £2.2bn Amec Foster Wheeler deal

Oil services company Wood Group has reached an agreement to take over rival Amec Foster Wheeler in a £2.2 billion deal.

Aberdeen-based Wood Group said the deal will result in 'significant cost and revenue synergies' of at least £110 million a year.

Under the terms of the all share transaction, Wood Group would hold 44% of the new entity, with the offer price of 564p representing a 15% premium to Amec Foster's closing share price of 489.2p on Friday.

Shares in Wood Group rose 6.85% in morning trading, while Amec's shares rocketed 17%.

Wood Group chairman Ian Marchant said: 'The combination extends the scale and scope of our services, deepens our existing customer relationships, facilitates further development of our technology-enabled solutions and broadens our end market, geographic and customer exposure.

'Delivering significant sustainable synergies will also result in a leaner and more competitive combined group, creating value for shareholders.'

Shareholders will be asked to vote on the deal, but the boards of both companies have unanimously recommended it be approved.

Debt-laden Amec had planned to launch a £500mn rights issue to bolster its balance sheet, but those plans have been suspended following the offer from John Wood.

Amec chairman John Connolly said the tie-up supports its 'standalone prospects'.

If the deal is approved, Robin Watson and David Kemp, currently chief executive and finance boss of Wood Group respectively, will continue in the same roles in the combined entity.

Ian Marchant is also set to continue as chairman of the new firm.