Wood Group ups savings in £2.2bn Amec Foster deal

Wood Group chief executive Robin Watson

Shares of Aberdeen-based oil and gas services company Wood Group rose after it said its expected annual cost synergies from its proposed £2.2 billion deal to buy rival firm Amec Foster Wheeler increased by £40 million to at least £150 million by the end of the third year.

“As a result of further ongoing analysis of existing information and integration planning, Wood Group has been able to increase the expected level of pre-tax cost synergies from at least £110 million per annum to at least £150 million per annum by the end of the third year following completion of the combination,” said Wood Group.

“This is an increase of 36% compared with the anticipated synergies set out in the original announcement.”

Wood Group share rose about 4% to around 790p to give it a stock market value of roughly £3 billion.

Last month, Wood Group said it agreed to buy rival firm Amec Foster Wheeler for about £2.2 billion in an all-share “transformational” deal.

Wood Group’s biggest ever takeover would create a combined firm with a stock market value of about $6 billion, according to Bloomberg data, making it among the biggest oil services companies in Europe, ahead of Petrofac and of Saipem SpA.

Meanwhile, Scotland’s biggest offshore union, Unite, repeated its calls for transparency on any impact the merger would have on jobs.

Unite regional officer John Boland said: “We have met with Wood Group since the announcement of their merger with Amec Foster Wheeler, and asked them specifically about the possible impact.

“But we have still not been given details of the company’s plans on jobs.

“It is incredibly disappointing that the company are making public statements about efficiency savings, without first speaking to workers and their representatives about what that means.

“We need full transparency and consultation over any future changes that will affect staff.”