Shares jump as oil services firm Wood Group sets out extra cost-savings from £5bn Amec Foster Wheeler merger

 
William Turvill
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Wood Group agreed a £2.2bn takeover deal for Amec Foster Wheeler last month (Source: Getty)

Oil services group John Wood Group today increased its cost-saving estimates for its merger with Amec Foster Wheeler, sending its shares up four per cent.

Wood Group, which agreed the terms of a £5bn merger with Amec last month, initially said synergies would total £110m a year.

Read more: UK oil services companies in £5bn merger deal

The company today upgraded the figure by £40m to £150m “as a result of further ongoing analysis of existing information and integration planning”.

Wood Group, which under the deal would acquire Amec for £2.2bn, expects to make the savings by reducing operating costs, cutting management roles and consolidating offices.

After increasing its cost-savings estimates, Wood Group’s shares jumped four per cent to 788p, up from 752p before the deal was announced. FTSE 250-listed Amec’s shares also bounced more than three per cent to 552p today, having been at 489p before the deal was agreed.

Read more: Wood Group boss: Is there room for four North Sea contractors?

Under the terms of the deal, Amec Foster Wheeler shareholders will receive 0.75 new Wood Group shares for each of their shares.

The company has ascribed a value of £5.64 per Amec Foster Wheeler share, representing a 28.7 per cent premium on a 30-day average of £4.53, or a 15.3 per cent premium based on Friday’s closing price, £4.83.

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