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Amec Foster Wheeler agrees offer from Wood

13 March 2017 07:56

Amec Foster Wheeler has agreed an all-share offer from Wood Group.

Amec Foster Wheeler said significant progress on its £100m overhead cost reduction programme in the fourth quarter was offset by ongoing challenging conditions in the oil and gas market and the impact of cost over-runs on a fixed price US government contract in the Pacific in the E&I segment.

Overall, trading margin was 5.8%, 110 basis points lower than 2015.

Revenue in 2016 was £5,440m (2015: £5,455m), down 8% on a like for like basis, as a strong performance in solar and E&I was offset by continuing weakness in the oil and gas market.

Trading profit in 2016 was £318m (2015: £374m).

The order book at the end of December stood at £5.8bn, compared to £6.2bn at the half year.

The group said that since the year end it had seen a number of contract wins and today announced that it had clinched a new agreement, worth £125 million to provide long-term support to EDF Energy Nuclear Generation.

Chairman John Connolly said: "Since the arrival of Jonathan Lewis as CEO, the executive management team has made significant progress towards the transformation of the business.

"This has been achieved through cost reduction initiatives, the disposal of non-core assets and a reorganisation of the business.

"The Board have fully supported the revised strategy and the preparations to deliver the appropriate balance sheet to support its standalone prospects.

"However, the Board believes that a combination with Wood adds to the standalone prospects of the Company, by accelerating the delivery of the future value inherent in the Amec Foster Wheeler business and, at the same time, helps to realise the full potential of each of Amec Foster Wheeler and Wood.

"The all-share structure of the offer allows our shareholders to benefit from the significant synergies and other strategic benefits that are expected to be realised from the combination.

"Amec Foster Wheeler will also be well represented on the Board of the enlarged group, with four of our directors joining Wood's board, including Roy Franklin, who will be appointed Deputy Chairman and Senior Independent Director."

The group said that as a consequence of today's recommended all share offer for the company, it no longer planned to release its full year results and host the investor event on 21 March 2017.

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