Is the all-share takeover of Amec Foster Wheeler (AMFW) off the table? Amec’s share price suggests investors are nervy, though as the oil services group explained to the market in its half-year results, its merger with Wood Group (WG.) is on track to complete in the fourth quarter of 2017. Such reassurance may have explained the shares’ 5 per cent gain on the publication of these numbers, particularly as the accounts offered limited consolation elsewhere. But Amec stock is still 20 per cent adrift of 564p-a-share valuation when the all-share deal was first proposed in March.
Why might shareholders want to own the enlarged group? The first answer is at the top of interim numbers: challenging conditions in the upstream oil and gas and solar divisions caused underlying revenue to dip 24 per cent in the period. The second concerns the Serious Fraud Office’s investigation into Amec’s historic use of third parties “and possible bribery and corruption and related offences”, though as analysts at Canaccord Genuity pointed out last month, the possibility of Wood Group extricating itself from the tie-up looks slim. Indeed, the larger group explicitly highlighted these disclosures to shareholders in a merger circular at the end of May.
On average, analysts expect pre-tax profit of £153m and adjusted EPS of 39.2p this year, against £254m and 50.4p in 2016.
| AMEC FOSTER WHEELER (AMFW) | ||||
| ORD PRICE: | 453p | MARKET VALUE: | £ 1.76bn | |
| TOUCH: | 452-453p | 12-MONTH HIGH: | 631p | LOW: 396p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 254p* | NET DEBT: | 100% | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | (£bn) | profit (£m) | share (p) | per share (p) |
| 2016 | 2.84 | -446 | -116 | 7.4 |
| 2017 | 2.33 | 77 | 15.3 | nil |
| % change | -18 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| *Includes intangible assets of £2.4bn, or 617p a share. | ||||
