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