The UK’s Competition and Markets Authority (CMA) said it has accepted proposals to resolve competition concerns regarding the £2.2 billion purchase of Amec Foster Wheeler by Aberdeen-based oil and gas services giant Wood group.
Both companies provide engineering services to the upstream offshore oil and gas sector in the UK Continental Shelf.
“After the CMA found that competition concerns could arise in the supply of engineering and construction services and operation and maintenance services, the companies offered to sell Amec Foster Wheeler’s businesses in these areas to address the CMA’s concerns,” said the CMA.
“The CMA found that this proposal would, in principle, be suitable to address its competition concerns and opened a public consultation in August.
“Following this, the CMA is now satisfied the issues it identified will be fully addressed by the remedy offered.
“The CMA has therefore decided that the merger will not be referred for an in-depth, phase 2, investigation.”
Kate Collyer, CMA Deputy Chief Economic Adviser and decision maker in this case, said: “It is crucial that competition is maintained in this major UK industry.
“We have therefore conducted a thorough investigation into this merger, and believe that the sale of Amec Foster Wheeler’s assets will address our concerns and ensure that customers in the North Sea continue to be able to obtain competitive bids.
“The CMA is committed to conducting merger investigations as quickly and efficiently as possible. In this case, the CMA worked with the companies on a ‘twin-track’ approach, engaging with them on shaping remedies that might mitigate competition concerns, if any were found, whilst still investigating whether such concerns arose.
“This enabled us to promptly reach a final view on the proposed remedy after competition concerns were identified, helping to reduce uncertainty about the potential impact of the merger for customers within this industry.
“Amec Foster Wheeler’s relevant assets will now be sold to a purchaser approved by the CMA.”
The deal now expected to complete in October 2017, following merger clearance in Mexico.
Wood Group CEO Robin Watson said: “Since we announced the deal in March, both parties have maintained a relentless focus on keeping on schedule.
“Today’s earlier than anticipated decision from the CMA allows us to move forward with pace and we are very confident of completing the acquisition of Amec Foster Wheeler in October.”
Amec Foster Wheeler CEO Jon Lewis said: “We welcome today’s announcement from the CMA.
“We have made significant progress marketing Amec Foster Wheeler’s UK upstream oil and gas business to a range of high quality bidders, which has helped to ensure that we will close the transaction in October, bringing the many benefits of the combined company to our clients, colleagues and shareholders.”