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AMEC plc Offers £1.9bn For Foster Wheeler

Shares in AMEC (LSE: AMEC) lifted over 3% in early trade this morning, following a trading update in which management confirmed rumours of a possible £1.9bn offer for international engineering contractor Foster Wheeler.

The provisional terms would mean that Foster Wheeler shareholders would receive $32 for each share, broken down to around 0.9 new AMEC shares and $16 in cash, while the possible cash component amounts to £968m.

If the proposed takeover is successful, it would mean AMEC’s current revenues in the Growth Regions would be more than doubled, while it would also position AMEC to “serve across the whole oil and gas value chain, adding mid and downstream capabilities to AMEC’s existing upstream focus”.

However, it’s worth recalling that AMEC was involved in a similar offer last year, in a £700m bid for rival Kentz, which was eventually pulled from the table and caused a mini-slump in the share price.

Elsewhere — despite AMEC announcing that performance for the year was in line with expectations — due to the possible Foster Wheeler acquisition likely not to realise the anticipated “enhanced double-digit earnings” in 2014, as well as the rebound in the strength of the pound, management warned that it no longer expects reporting adjusted earnings per share of more than 100p in the year.

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> Sam does not own shares in any company mentioned.