A PROPOSED £2.2 billion takeover that would create one of the world’s largest oilfield service companies could be set to move ahead after steps to allay competition concerns.
Glasgow-based Amec Foster Wheeler has offered to sell off a number of assets as part of a bid to clear the way for a takeover by Aberdeen giant Wood Group that would create one of the world’s largest oilfield service companies.
The Competition and Markets Authority (CMA) warned earlier this month that the deal could face an in-depth probe if the companies failed to address antitrust issues.
The 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.
Yesterday, the CMA said it was considering proposals put forward by the firms which would see Amec Foster Wheeler sell off “almost all” assets which contribute to these services in its upstream offshore oil and gas business in the UK.
The watchdog added that there are “reasonable grounds” for believing these undertakings, or a modified version of them, might be acceptable and it will open a public consultation on the proposal.
Kate Collyer, deputy chief economic adviser and decision-maker in the case, said: “It is crucial that competition is maintained in this major UK industry. 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.”
Wood Group chairman Robin Watson said: “The announcement is an important milestone and gives us further confidence in our ability to complete the transaction in quarter four this year.”
Wood Group said merger and acquisition process for the remedy is already at an advanced stage. Amec Foster Wheeler commenced a formal marketing process in May, which has attracted interest and is progressing well.
The CMA in its provisional decision does not require the parties to complete the sale of the remedy business in advance of completing the takeover.
Amec Foster Wheeler chief executive Jon Lewis said: “We welcome the announcement by the CMA. 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.”
If the CMA does not accept the undertakings proposed, the deal will be referred for an in-depth investigation.
When announcing the deal in March, Wood Group said it would 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.
Why are you making commenting on The National only available to subscribers?
We know there are thousands of National readers who want to debate, argue and go back and forth in the comments section of our stories. We’ve got the most informed readers in Scotland, asking each other the big questions about the future of our country.
Unfortunately, though, these important debates are being spoiled by a vocal minority of trolls who aren’t really interested in the issues, try to derail the conversations, register under fake names, and post vile abuse.
So that’s why we’ve decided to make the ability to comment only available to our paying subscribers. That way, all the trolls who post abuse on our website will have to pay if they want to join the debate – and risk a permanent ban from the account that they subscribe with.
The conversation will go back to what it should be about – people who care passionately about the issues, but disagree constructively on what we should do about them. Let’s get that debate started!
Callum Baird, Editor of The National
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here