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Amec offers $3.2bn for Foster Wheeler

Amec has made a $3.2bn a provisional offer for Foster Wheeler AG
January 13, 2014

In the wake of its unsuccessful tilt at Kentz Corp (KENZ), Amec (AMEC) announced that it is to make a provisional offer for global engineering group Foster Wheeler AG for $3.2bn (£1.9bn). Foster Wheeler won’t seek out alternative offers through to 22 February, by which time it is expected that the terms will be formalised. If completed, Foster Wheeler shareholders will hold 23 per cent of the enlarged group, and Amec would subsequently apply for a listing of its shares in the US.

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The deal, which will be funded 50/50 through new shares and cash, values the engineering group at $32 a share, a 2 per cent premium to the closing price of Foster Wheeler on NASDAQ on the day prior to the announcement. The £968m cash component of the deal will be financed through Amec’s existing cash resources and new debt financing, which would leave the group with manageable net debts that amount to 1.6 times cash profits.

Amec is pursuing the deal in order to bolster its capabilities in the downstream segment of the oil & gas industry, while expanding its geographic spread, although analysts have expressed reservations over whether Foster Wheeler’s power generation division dovetails with Amec’s existing business model.