Petroleum Africa
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Tuesday, January 14, 2014
Industry news is full of reports of a deal in the works between two service companies – Foster Wheeler AG and AMEC. Foster Wheeler and AMEC have negotiated non-binding terms of a business combination pursuant to which AMEC would acquire each outstanding share of Foster Wheeler common stock for a transaction consideration consisting of 0.8998 shares of AMEC common stock and $16.00 in cash. In addition, assuming binding terms are agreed, Foster Wheeler expects to pay a one-time dividend of $0.40 per share prior to closing.
Based on AMEC’s stock price of £10.79 per share (the close of trading on January 10) and an exchange rate of £/$1.648, the proposed transaction would value each Foster Wheeler share at approximately $32.40 and the fully diluted share capital of Foster Wheeler at approximately $3.3 billion (taking into account the proposed $0.40 dividend by Foster Wheeler). This represents a premium of approximately 12.8% to $28.73, the Foster Wheeler’s closing stock price on November 26, which was trading day prior to initial public reports about a potential business combination involving the two firms.
In connection with their negotiations, Foster Wheeler has agreed with AMEC not to solicit alternative proposals through February 22.
Foster Wheeler is being advised by Goldman, Sachs & Co. and J.P. Morgan Securities LLC, as financial advisors, and Freshfields Bruckhaus Deringer LLP as legal advisors, in connection with the review of strategic alternatives and its discussions with AMEC.
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