UK Raises Concerns over Wood-AmecFW Merger

The UK competition regulator has raised concerns over Wood Group’s planned takeover of Amec Foster Wheeler (AmecFW).

The Competition & Markets Authority (CMA) said August 2 that, at the end of its initial investigation, it found that the merger could lead to competition concerns in the supply of engineering and construction services and operation and maintenance services on the UK continental shelf, where the two firms compete head-on.

It said the merger would reduce the number of major players active in these markets from four to three. It has given Wood Group until August 9 2017 to formalise its final remedies proposal. If it does not, or the proposal is insufficient, the CMA will refer it for an in-depth ‘phase 2’ investigation.

Wood Group and AmecFW shareholders June 15 approved the £2.2bn ($2.9bn) all-share takeover, announced the previous month, and both firms said the deal would complete in 4Q 2017. Then July 11 the UK’s Serious Fraud Office confirmed it had opened an investigation into the activities of AmecFW and subsidiaries for suspected bribery, corruption and related offences.

Wood Group said in response to the CMA's announcement that it had already submitted a proposal to it: "The proposed remedy was in respect of assets and operations of AmecFW that represent the majority of AmecFW’s UK upstream oil and gas business located in the UK and serving UK customers.

"Wood Group will now formally submit the remedy proposal to the CMA. The CMA will provisionally decide whether this remedy proposal is sufficient by 16 August 2017 at the latest, with its final decision due by 11 October 2017," it said, adding both firms continue to expect merger completion in 4Q 2017.

The CMA confirmed to NGW that the planned merger "does not fall under European Commission jurisdiction, so CMA alone is in examining it."

Mark Smedley