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Wood Group completes £2.2bn takeover of rival firm

Deal finalised after regulators expressed fears over competition in North Sea services.

Oil: New company worth £5bn (file pic).
Oil: New company worth £5bn (file pic). PA

Aberdeen-based oil services company Wood Group has completed a £2.2bn takeover of its rival Amec Foster Wheeler.

The deal was finalised after Amec agreed to offload the majority of its North Sea operations to an Australian firm in order to address competition concerns.

The Competition and Markets Authority (CMA) had expressed fears the takeover gave rise to antitrust issues surrounding the supply of engineering, construction and maintenance services in the North Sea.

Amec, headquartered in London, will bank £228m for selling the upstream oil and gas operations to Sydney-based WorleyParsons to ease the regulator's fears.

In 2016, Amec's North Sea business contributed revenues of £740m and a trading profit of £43m.

The move to sell the assets off effectively cleared the way for the completion of the takeover.

Robin Watson, chief executive of Wood Group, said on Monday: "This transformational acquisition creates a global leader in the delivery of project, engineering and technical services to energy and industrial markets.

"We expect to deliver significant cost synergies and incremental revenue synergies in a less cyclical business which retains a predominantly reimbursable, asset light model with a balanced risk appetite."

When first announcing the takeover in March, Aberdeen-based Wood Group said it will result in "significant cost and revenue synergies" of at least £110m a year.

Wood Group employs 29,000 people while Amec has 35,000 workers and the new entity would be valued at around £5bn.

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