The Courier & Advertiser (Perth and Perthshire Edition)
Watchdog brings energy services merger closer
Competition and Markets Authority agrees in principal to remedies offered by Wood Group and Amec Foster Wheeler to alleviate competition concerns
Amec Foster Wheeler has offered to sell off a number of assets as part of attempts to allay competition concerns over its proposed £2.2 billion takeover by north east-based Wood Group.
The Competition and Markets Authority (CMA) warned earlier this month the deal could face an in-depth probe if the companies fail to address antitrust issues.
The UK watchdog believes the deal as it currently stands gives rise to competition concerns, particularly surrounding the supply of engineering and construction services, as well as operation and maintenance services in the North Sea.
However, Amec’s offer to divest “almost all” of its upstream oil and gas assets in UK waters may have headed off an in-depth investigation.
The watchdog said there are “reasonable grounds” for believing these undertakings, or a modified version of them, might be an acceptable remedy to the competition concerns.
It will now open a public consultation on the proposal.
“It is crucial that competition is maintained in this major UK industry,” Kate Collyer, CMA deputy chief economic adviser and decision-maker in the case, said.
“We will consider the undertakings offered by Wood Group and Amec Foster Wheeler further, and carefully consult interested parties, in order to make sure that they fully address our concerns.”
The CMA has until October 12 to decide if the remedy offered is sufficient.
If it falls short, an in-depth investigation into the deal will follow.
The two companies said they still expected the merger to close by the end of this financial year.
Robin Watson, chief executive of Wood Group, said “Today’s announcement is an important milestone and gives us further confidence in our ability to complete the transaction in quarter four this year.”
Jon Lewis, chief executive officer at Amec Foster Wheeler, added: “Our offer of a proposed remedy in May and the early commencement of the sale process to potential buyers of the upstream oil and gas business has ensured we have navigated this process ahead of schedule increasing the likelihood that the transaction with Wood Group will close in quarter four this year.”
When announcing the deal in March, Aberdeen-based Wood Group said it will result in “significant cost and revenue synergies” of at least £110 million a year.
Wood Group employs 29,000 people, while Amec has 35,000 workers and the new entity would be valued at around £5bn.