REUTERS - Oilfield services firm John Wood Group said on Monday it proposed to buy smaller peer Amec Foster Wheeler for a recommended all-share offer valued at about 2.2 billion pounds ($2.69 billion).
Shares of Amec Foster rose 18.60 percent to 5.80 pounds in morning trading, well above the offer price of 5.64 pounds per share.
After hitting their lowest in more than a decade of $27.10 in January 2016, oil prices have seen an uptick and has largely held above $50 this year, boosting the industry.
The all-stock deal represents a 15.3 percent premium to Amec Foster's Friday close of 489.2 pence.
Amec Foster shareholders will receive 0.75 of new Wood Group share for each share held, the company said.
The deal will result in Amec Foster Wheeler shareholders owning about 44 percent of the combined company, the companies said.
The companies also said the deal is expected to add to earnings per share on an adjusted basis for Wood Group and Amec Foster in the first full year after completion of the deal.
Wood Group said it expected identified pretax cost savings to reach a run rate of at least 110 million pounds.
Wood Group Chief Executive Robin Watson and Chief Financial Officer David Kemp will retain their roles in the new entity. Ian Marchant will remain as chairman of the combined company.
($1 = 0.8188 pounds)
Reporting by Justin George Varghese and Arathy S Nair in Bengaluru; Editing by Gopakumar Warrier