AMEC Sees Double-digit Earnings Accretion On Foster Wheeler Deal - Quick Facts

(RTTNews) - AMEC plc (AMEC.L) reported that it has provisionally agreed with Foster Wheeler AG (FWLT) the outline terms for a recommended cash and share offer for all of Foster Wheeler's issued and to be issued share capital. Foster Wheeler shareholders would receive approximately 0.9 new AMEC shares and $16.00 in cash, together representing $32.00 for each Foster Wheeler share. The possible offer equates to a value of approximately $3.2 billion or 1.9 billion pounds.

AMEC expects double-digit earnings accretion in the first 12 months, with ROIC expected to exceed the cost of capital in the second 12 months period, after completion. However, this will not be fully realised in 2014 and AMEC does not now expect to report adjusted earnings per share of greater than 100 pence in the year.

AMEC expects the cash component of the possible offer, or 968 million pounds, will be financed by a combination of its existing cash resources and new debt financing. AMEC expects the remainder of the offer to be satisfied by the issuance of new AMEC shares to Foster Wheeler shareholders, some or all of which may take the form of American Depositary Receipts. AMEC will seek a US listing in connection with the transaction. Foster Wheeler shareholders would hold shares in AMEC representing approximately 23 percent of its enlarged share capital, and AMEC would expect to have a pro-forma trailing 12 months ratio of net debt to EBITDA of approximately 1.6 times at completion. Foster Wheeler also expects to pay a pre-completion dividend of $0.40 for each Foster Wheeler share.

Foster Wheeler has agreed not to solicit alternative proposals until 22 February 2014 by which time it is expected that definitive agreements will be entered into. Completion is anticipated in the second half of 2014. On completion of the transaction, two non executive directors of Foster Wheeler are expected to join the AMEC board. AMEC said it has performed in line with its expectations for 2013 and the underlying business continues to perform as expected. However, the recent strengthening of sterling relative to North American currencies means the forecast average exchange rates for 2014 are less favourable than 2013. This currently translates into an impact of approximately 10 million pounds of EBITA, year-on-year.