Two engineering stalwarts with bases across the North East have announced a provisional agreement which will culminate in a £1.9bn takeover deal.
Engineering and project management company Amec, which has bases in North Shields and Newcastle, has agreed terms to take over Foster Wheeler, an international engineering company with a presence in Middlesbrough.
The provisional agreement between the competitors, who collectively employ hundreds in the region, improves Amec’s capabilities in the growing markets of liquefied natural gas and shale gas.
Amec announced the deal as it reported a record order book of £4.1bn, up 13% year on year.
New full-year results for the firm also showed revenues fell 3% from £4.1bn to £4bn while profits stayed steady at £255m.
The completion of the takeover is subject to regulatory approval but is expected to be completed in the second half of the year.
The acquisition comes around five months after Amec walked away from a potential £700m takeover of the smaller engineering firm Kentz.
Amec chief executive, Samir Brikho, said: “The combination with Foster Wheeler is financially and strategically attractive.
“I believe it is a compelling proposition for our shareholders, customers and employees.”
Chief executive of Foster Wheeler, Kent Masters, said: “Both companies have strategies that are highly focused on growth, and our combination will help deliver on Foster Wheeler’s key strategic objectives: establishing material positions in upstream and minerals and metals, building positions in growth geographies and extending our services offering.
“Amec continued to make good progress in 2013, with adjusted earnings per share up by 11% and operating cash flow particularly strong.
“As expected, strong performances from our oil and gas businesses in UK North Sea and the Middle East and from US renewables offset weaker markets elsewhere.
“We continue to expect good underlying revenue growth in 2014, with ongoing strength in the conventional oil and gas and clean energy markets. As a mark of our continued confidence in the outlook and reflecting our strong cash generation, the board is recommending a 15% increase in the dividend.”