The Courier & Advertiser (Fife Edition)
Regulator gives green light to Wood takeover
Competition and Markets Authority clears Amec deal after North Sea asset sale offer
Regulators have cleared the way for energy services giant Wood Group to acquire rival Amec Foster Wheeler (AFW) in a £2.2 billion deal.
The Competition and Markets Authority (CMA) said it had accepted remedies offered by AFW to alleviate potential competition concerns brought about by the merger.
The CMA flagged that the businesses were main suppliers of key upstream oil and gas services in the North Sea and their combination could impact on the ability of customers to get a fair deal.
In response, Wood Group and AFW agreed to offload the majority of Amec’s North Sea assets.
That proposal has now been deemed appropriate by the CMA and the two businesses have been given the green light to progress their merger.
The outcome avoids the need for a potentially lengthy and expensive full investigation into the merger by the CMA.
“It is crucial that competition is maintained in this major UK industry.” Kate Collyer, deputy chief economic adviser and decision-maker in this case, said.
“We have therefore conducted a thorough investigation into this merger, and believe that the sale of Amec Foster Wheeler’s assets will address our concerns and ensure that customers in the North Sea continue to be able to obtain competitive bids.
“The CMA is committed to conducting merger investigations as quickly and efficiently as possible.
“In this case the CMA worked with the companies on a ‘twin-track’ approach, engaging with them on shaping remedies that might mitigate competition concerns, if any were found, whilst still investigating whether such concerns arose.
“This enabled us to promptly reach a final view on the proposed remedy after competition concerns were identified, helping to reduce uncertainty about the potential impact of the merger for customers within this industry.”
Wood Group said it now expected the companies to complete their coming together next month, with merger clearance in Mexico the only remaining hurdle to the deal going through.
“Since we announced the deal in March, both parties have maintained a relentless focus on keeping on schedule,” Wood Group chief executive Robin Watson said.
“Today’s earlier than anticipated decision from the CMA allows us to move forward with pace and we are very confident of completing the acquisition of Amec Foster Wheeler in October.”
“We welcome today’s announcement from the CMA,” AFW chief executive Jon Lewis said.
“We have made significant progress marketing Amec Foster Wheeler’s UK upstream oil and gas business to a range of high quality bidders, which has helped to ensure that we will close the transaction in October, bringing the many benefits of the combined company to our clients, colleagues and shareholders.”
Wood Group employs 29,000 people, while Amec has 35,000 workers.
The new entity will be valued at around £5bn.
There are likely to be significant job losses in the combined business as synergy savings are identified and implemented.