WOOD Group has offered to sell the ‘majority’ of Amec Foster Wheeler’s oil and gas business in the North Sea, in a move aimed at securing competition clearance for its proposed £2.2bn (US$2.8bn) takeover.
The revelation was made in a prospectus released last week, and is likely to raise concerns over jobs in the area, which suffered sharp falls in employment following 2014’s oil price crash.
Back in March this year, Amec accepted a £2.2bn all-share offer from its rival. At the time of the offer, the business was struggling with £1bn of net debt, and was a week away from a plan to suspend dividend payments and ask shareholders for £500m via a rights issue.
However, concerns were raised over potential reduced competition in the North Sea following the merger. Earlier this month, The Competition and Markets Authority (CMA) launched a phase one investigation that invited interested parties to express any concerns before it decides whether or not to launch a full inquiry.
In the prospectus, Wood Group detailed its offer to the competition watchdog to sell the majority of the unit, which it believes will “be sufficient” to obtain clearance for the deal.
Wood Group’s CEO, Robin Watson, had previously acknowledged that the two companies have a significant overlap in the area, but told analysts: “We are confident that the merits of the overall deal are not compromised by the North Sea situation.”
Amec’s North Sea upstream business currently has around 4,200 employees, and provides services such as maintenance to energy companies offshore to Aberdeen in the UK. Last year, it generated £740m in revenue and £42m in earnings before interest, tax, depreciation and amortisation last year.
Global oilfield services companies have been hit by a sharp decline in activity since the 2014 oil price slump. Figures released by Oil & Gas UK, a trade body, describe a fall in North Sea employment of a quarter in the period 2013–2016, down to 330,400 at the end of the year.
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