Amec Agrees To Buy Foster Wheeler For $3.2 Billion In Cash, Stocks

To buy the Zug, Switzerland-based company boosting its capacity in oil products and petrochemicals.

Amec Plc, the second-biggest U.K. oil and gas engineer, agreed to buy Foster Wheeler AG (Nasdaq: FWLT) for US$3.2 billion to expand foreign and fuel-product business.

Foster Wheeler, based in Zug, Switzerland, had a market value of US$3.1 billion at the end of last week after gaining 25% in the fourth quarter, when talks with Amec and Petrofac Ltd. were reported.

The transaction will boost capacity in the oil products and petrochemicals business at London-based Amec, now mainly focused on helping companies get oil and gas out of the ground. Foster Wheeler has worldwide operations and has been working in Saudi Arabia and the United Arab Emirates since the 1970s, according to its website.

The cash part of the deal will cost about 1 billion pounds, and the company currently has about 100 million pounds of cash, CFO Ian McHoul said on the call. Amec will use current funds and new debt for that portion of the purchase.

Amec expects to close the deal, subject to conditions, in the second half. Foster Wheeler agreed not to seek out other offers before Feb. 22, when agreement on the final terms is expected, Amec said. Amec will seek a U.S. listing after the purchase.

Bank of America-Merrill Lynch and Linklaters LLP advised Amec on the deal, while JPMorgan Chase & Co. advised Foster Wheeler.