A merger between two UK oilfield services companies, Wood Group and Amec Foster Wheeler, is set to be complete next month as the UK’s competition watchdog, the Competition and Markets Authority (CMA), has accepted the duo’s proposals to resolve competition concerns regarding the merger.
The CMA began investigating the merger of the two companies in June 2017. After it found that competition concerns could arise in the supply of engineering and construction services and operation and maintenance services, the two companies offered to sell Amec Foster Wheeler’s businesses in these areas to address the CMA’s concerns.
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 said on Tuesday it 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, 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.”
Following the acceptance of the remedy proposal, Wood Group said on Tuesday that the combination is therefore now expected to complete in October 2017, following receipt of merger clearance in Mexico.
The remedy consists of the majority of Amec Foster Wheeler’s UK upstream oil and gas business located in the UK and serving UK customers, excluding its commissioning business, qedi. The CMA does not require the parties to complete the sale of the remedy business in advance of completing the combination.
Commenting on the CMA’s announcement, Robin Watson, Chief Executive of Wood Group 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.”
Jon Lewis, Chief Executive Officer of Amec Foster Wheeler 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.”
The CMA added that Amec Foster Wheeler’s relevant assets will now be sold to a purchaser approved by agency.