Amec offers £1.9bn to buy rival Foster Wheeler

Amec offers £1.9bn to buy rival Foster Wheeler

Engineering firm Amec today revealed a $3.2 billion (£1.9 billion) potential offer for rival Foster Wheeler, keeping up this year’s hectic start for takeover activity.

Amec’s proposed acquisition of the Reading-based but Swiss-domiciled business will create a company with annual revenues of £6 billion and more than 42,000 staff.

Only last week, cinema group Cineworld revealed plans to buy Eastern European operator Cinema City for £500 million. Amec is paying cash and shares for Foster Wheeler, which will end up with a 23% stake in Amec after completion of the deal. Amec has been on the hunt for something to buy for the past year and was thwarted in an £800 million bid for German rival Kentz.

Foster, being advised by Goldman Sachs over strategic options, approached Amec last autumn about a potential deal before talks ended.

Sources said the duo got back around the table again in December. The intense speculation around a possible combination forced them into an early announcement before due diligence was completed to avoid falling foul of the UK Listing Authority.

Foster will not consider alternative proposals until February 22 by which time definitive agreements should be in place.

The takeover, called “compelling” by Amec’s chief executive Samir Brikho, will bolster Amec’s position in Foster’s strongholds including Latin America, Saudi Arabia and China.

Amec, which derives around three quarters of its sales from Europe and the US, added that its traditional strengths in offshore oil and gas projects were complemented by Foster’s greater presence in refining.

The deal is also expected to generate $75 million a year in cost savings. Amec traces its history back more than 160 years but Brikho sold off its construction business to focus on oil and gas.