LONDON (The Deal) -- The U.K.'s Amec on Monday, Jan. 13, announced an agreement in principle worth $3.2 billion to take over engineering group and power-equipment maker Foster Wheeler (FWLT).
Foster Wheeler has been on Amec's acquisition radar for many months and the 50-50 cash-and-stock deal will allow the Aberdeen, Scotland-based buyer to offer mid- and downstream services to the energy sector alongside its existing upstream offering. Foster Wheeler will also increase Amec's presence in important U.S. markets, as well as in the Middle East, Asia and Latin America.
The deal comes after Amec failed to entice oilfield services provider Kentz with a 682 million pounds ($1.1 billion) offer in September. Amec will offer 0.9 of a new share and $16.00 in cash per Foster Wheeler share, or about $32 per share in total. That's a scant 1.7% premium to the target's $31.46 closing price on Nasdaq on Friday, though Foster Wheeler noted that it is 12.8% more than its price on Nov. 26, before a report of Amec's bid interest.
Amec will have to list in the U.S. as part of the deal, which will give Foster Wheeler shareholders a 23% stake in the enlarged company.
Foster Wheeler has an engineering and construction unit, which serves the energy, chemicals and pharmaceuticals industries, and a smaller division making power equipment. The company is registered in Switzerland but has its operational headquarters in Reading, England. It reported nine-month revenue of $2.46 billion and Ebitda of $213 million. Net debt as of Sept. 30 was $131 million.