WorleyParsons in $303m UK oil and gas acquisition

WorleyParsons has entered the UK North Sea market with the $303m acquisition of an oil and gas services operator.

WorleyParsons CEO Andrew Wood.

Engineering group WorleyParsons has entered the UK’s North Sea market with the acquisition of Amec Foster Wheeler’s UK oil and gas assets for $303 million.

AFW UK Oil and Gas is being sold to answer competition concerns raised by the Wood Group’s £2.2 billion takeover of rival Amec Foster Wheeler.

The deal will lift WorleyParsons’ earnings and accelerate its efforts to build a global business offering maintenance, modifications and operations.

The deal is supported by WorleyParsons’ major shareholders Dar Group, which owns 20 per cent, and by John Grill, who owns 10 per cent.

The engineering company says it will raise $322 million at $13 a share to fund the acquisition.

That represents an 8.7 per cent discount to Friday’s closing price of $14.24.

WorleyParsons said the deal is expected to be earnings per share accretive in the first year of ownership and reduce debt-to-EBITDA to 2.2 times from 2.4.

CEO Andrew Wood said the UK group’s strong position in the maintenance, modification and operations market was a key reason for the deal.

“We are excited to enter the UK North Sea market as a leading player based in Aberdeen,” Mr Wood said.

WorleyParsons said AFW UK has maintainable revenue of about £350 million and earnings before interest, tax, depreciation and amortisation of £20 million a year.

UBS advised WorleyParsons on the deal and is underwriting the entitlement offer.

With Dow Jones