LONDON - Amec, the British engineering and project management company, and a Swiss rival said Monday they have tentatively agreed to a cash and stock merger valued at about $3.2 billion.
Amec said the deal with Foster Wheeler would expand its footprint, including increasing its presence in Latin America.
Amec, which employs about 29,000 people in 40 countries, provides engineering and other services to the oil and gas industry, mining companies and other firms. It has annual revenue of about 4.2 billion pounds, or $6.9 billion.
Foster Wheeler provides engineering, construction and other services to a variety of industries, including oil and gas companies, chemical makers and pharmaceutical companies. Foster Wheeler has about 13,000 employees in more than 30 countries. It had revenue of about $3.4 billion in 2012.
The deal is expected to expand Amec’s ability to provide engineering and other services across the oil and gas sector, from drilling and exploration to refining.
As part of the proposed transaction, Amec would pay about £968 million pounds in cash and it would issue new Amec shares to Foster Wheeler’s stockholders. The deal would be equal to about $32.40 a share for each share of Foster Wheeler, representing a 12.8 percent premium on its closing price on Nov. 26, the day prior to public reports of a potential tie-up between the companies.
The combination “would be financially and strategically attractive,†Amec’s chief executive, Samir Brikho, said in a statement. “I believe it would be a compelling proposition for our shareholders, customers and employees.â€
The transaction is subject to the companies negotiating definitive merger agreements, approval by Foster Wheeler’s board and shareholders and regulatory approval. Foster Wheeler has agreed not to solicit any alternative proposals until Feb. 22.
“There can be no assurances that any transaction will ultimately be agreed between Foster Wheeler and AMEC, or what the definitive and binding terms of any such transaction would be,†Foster Wheeler said in a statement.
Following the deal, Foster Wheeler shareholders would own about 23 percent of the combined company.
If the deal is completed, Amec would fund the transaction through a combination of its existing cash resources and new debt financing. The merger is expected to be completed in the second half of 2014.
As part of the transaction, two nonexecutive directors from Foster Wheeler would join Amec’s board. Foster Wheeler also would issue a dividend of 40 cents a share before the deal is completed.
The financial advisers for Foster Wheeler are Goldman Sachs and JPMorgan Chase, while Freshfields Bruckhaus Deringer is serving as its legal adviser. Bank of America Merrill Lynch is serving as Amec’s financial adviser.
