AMEC is proposing to acquire Foster Wheeler in a deal that could be worth approximately $3.2 billion, the two companies announced earlier this week. The deal would involve a combination of cash and AMEC stock that would value each share of Foster Wheeler stock at approximately $32.40, according to a Foster Wheeler release. Foster Wheeler would also pay a one-time dividend of $0.40 per share prior to the deal being finalized. “The combination of our two businesses, AMEC and Foster Wheeler, would be financially and strategically attractive. As well as positioning us across the whole oil & gas value chain and providing scale in our Growth Regions, we would expect double-digit earnings enhancement in the first twelve months. I believe it would be a compelling proposition for our shareholders, customers and employees,” AMEC Chief Executive Samir Brikho said in a release.
In its release, Foster Wheeler said that it “believes that the meaningful equity component of the proposed terms would allow its shareholders to participate in the strategic and commercial benefits of the combined company, including significant potential synergies. Under the proposed terms, Foster Wheeler’s existing shareholders would own approximately 23% of the combined company, and it is expected that two members of the Company’s board would join the board of directors of AMEC as non-executive directors.”
Foster Wheeler has agreed to not solicit any other proposals through Feb. 22, but the deal with AMEC still needs to undergo various approvals before it is completed. “Other than with respect to non-solicitation of alternative proposals, no binding agreement has been entered into between the Company and AMEC with respect to any business combination, and the execution of definitive agreements with respect thereto is subject to mutual agreement of definitive terms, mutual due diligence and approval by each of the Company’s and AMEC’s board of directors, among other things,” the Foster Wheeler release states, adding, “Accordingly, readers are cautioned that 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.” AMEC said in its release that it expects the deal to be completed in the second half of 2014, but also noted, “However, there is no certainty that a firm offer will be made or that the transaction will proceed.
