Gulf Oil and Gas accountACCOUNT

Wood Group Estimates Higher Cost Synergies Associated with Amec Foster Wheeler Acquisition

Source: www.gulfoilandgas.com 4/5/2017, Location: Europe

Share |
Wood Group has estimated cost synergies of at least £150m (an increase of £40m) in relation to the recommended all-share offer for Amec Foster Wheeler by Wood Group announced on 13 March 2017.

As a result of further ongoing analysis of existing information and integration planning, Wood Group has been able to increase the expected level of pre-tax cost synergies from at least £110m per annum to at least £150m per annum by the end of the third year following completion of the Combination. This is an increase of 36 per cent. compared with the anticipated synergies set out in the Original Announcement.

In US$, the increase is equivalent to an increase from approximately US$134m to approx. US$183m, using the same dollar:sterling exchange rate of 1.2171:1 as set out in the Original Announcement.

The expected sources of quantified cost synergies, which are in addition to synergies previously targeted and already underway by Wood Group and Amec Foster Wheeler separately, comprise:
- operating efficiencies: approx. 50 per cent. of the identified cost synergies are expected to be generated from economies of scale in addressable operating cost, efficiencies in operational procurement spend and the reduction of duplicate costs across country and regional leadership;
- corporate efficiencies: approx. 20 per cent. of the identified cost synergies are expected to be generated from the reduction of duplicate costs across Board and executive leadership teams, in addition to other Corporate and Group functional costs; and
- administration efficiencies: approx. 30 per cent. of the identified cost synergies are expected to be generated from the consolidation of overlapping office locations, the elimination of duplicated IT systems and the reduction of duplicate costs across central support functions.

These anticipated synergies will accrue as a direct result of the Combination and would not be achieved on a standalone basis.

As further information and analysis becomes available, Wood Group is also confident of realising additional cost synergies that cannot be quantified for reporting at this time.

Wood Group estimates that realisation of these synergies would give rise to one-off costs of approx. £190 million (US$231 million) incurred in the first three years post-completion of the Combination. This is unchanged from the level identified at the time of the Original Announcement.

Aside from the one-off costs referred to above, the Wood Group Directors do not expect any material dis-synergies to arise in connection with the Combination.

Handling Tools >>

Handling Tools News in Scotland >>

Austria >>  5/29/2017 - The refinery utilisation rate in the US averaged around 92% during April, corresponding to 17.0 mb/d. This represented an increase of more than 1 mb/d...
Austria >>  5/28/2017 - The ORB ended the month slightly more than 2% higher on a monthly average basis, supported by a shortlived oil complex rally earlier in the month on i...

Austria >>  5/25/2017 - During the month, the pace of improvement in manufacturing conditions slowed. The JP Morgan Global Manufacturing Purchasing Managers’ Index (PMI) for ...
Scotland >>  5/25/2017 - Hess Corporation has signed a non-exclusive 10-year global agreement with Wood Group to provide engineering, project management, construction, commiss...

Cyprus >>  5/24/2017 - SeaBird Exploration has signed a letter of award for some additional work in West Africa for an undisclosed client. The project is due to commence in ...
Austria >>  5/22/2017 - Demand for OPEC crude in 2017 was revised down by 0.3 mb/d from the previous month, mainly due to the upward revision in non-OPEC supply as world oil ...

Related Categories: Blowout Preventers Ram, Rotary, Spherical & Annular  Casing, Tubing & Drill Pipes  Coiled Tubing  Drill Bits and Cutters  Extraction Equipment  General  Handling Tools  Hoisting Systems  Lubricating Equipment 

Related Articles: Blowout Preventers Ram, Rotary, Spherical & Annular  Casing, Tubing & Drill Pipes  Coiled Tubing  Drill Bits and Cutters  Extraction Equipment  General  Handling Tools  Lubricating Equipment 


Scotland Oil & Gas 1 >>  2 |

More News

 

Oil & Gas Companies in Scotland >>


Related Links

Gulf Oil and Gas
Copyright © Universal Solutions All rights reserved. - Privacy Policy.