Wood Group buys rival Amec Foster Wheeler for $2.7 billion

Wood Group is buying rival Amec Foster Wheeler (LON:AMFW) in an all-share takeover deal worth £2.2 billion (about $2.7bn) that brings together two of the UK's largest energy services companies.

The transaction comes barely a week before Amec was set to raise money through a £500m rights issue — an offer to existing shareholders to buy more shares at a special price — to strengthen its balance sheet.

Takeover brings together two of the UK's largest energy services companies.

The company, which was hit hard by the drop in oil prices, has £1bn of debt and has been selling assets in order to pay it down.

Ian Marchant, Wood Group’s chairman, said the takeover represented “a transformational transaction” for the group, as it extends the scale and scope of the firm’s services by diversifying its activities across the oil and gas, chemicals, renewables, environment and infrastructure and mining segments.

Wood Group wanted to broaden its source of service contracts before the 2014 oil market crash but the two-year rout has deepened its interest in expanding to new markets.

The combined company would have revenues of more than $12.3 billion and could dominate around a third of operations and maintenance contracts in the UK North Sea sector alone, based on historical awards.