Buying AMFW shares a few months ago was a lower cost entry into WG, but the closing prices today now show as almost parity valuation.
Although also showing a profit here, I see WG as a recovery stock and therefore will be holding.
The initial purchase of AMFG a couple of yeats ago (12/2016) was as a potential recovery stock but have had a roller coaster ride to show the small profit....... so WTFDIK anyway......
the press hasn't got hold of it properly yet and I suspect the shorters will be adding positions ahead of the next 'news' event which no doubt will follow same pattern as Petrofac in that 'directors' will be questioned under caution etc etc
Market seems reluctant to beat Amec up in same manner as Petrofac probably due to merger etc.
That said, the rollsroyce sp based on SFO case was not beaten up in same way as PFC, so perhaps it's pfc that was overdone?
If true, then the market has the true worth of pfc incorrect at 455p and I suspect it will head back to 550p+ to spare some blushes.
Sometimes you need other examples to play out before you know which ones have been overdone or underdone.
I can find nothing in AMFW's news to say that they are keeping anything out of the deal. The way I view it is that they are selling off their nuclear business to reduce their debt, and the Monopolies Commission has dictated that they sell off the Aberdeen business. I would expect the cash they get from both of these disposals to add to their cash position or be used to reduce total debt. So in effect Wood Group will benefit from these transactions.
These quotes are from the RNS released on 13 March 2017:
"With the proceeds of the planned disposal of the Company's nuclear business now expected in Q3 2017, to ensure continued compliance with its financial covenants, the Company is today initiating a process to increase the leverage covenant in its debt facilities to provide additional headroom prior to the measurement period ending 30 June 2017."
"Earlier today, Wood announced a recommended all-share offer for the entire share capital of Amec Foster Wheeler."
Perhaps this country's attitude to national champions helps explain our trade imbalance. Just when a company becomes large enough to compete on the international stage, in steps a government agency to break it up.
Governments keep changing the name and the powers of this body just to keep everyone on their toes. It started out as the Monopolies and Restrictive Practices Commission on 1 January 1949. It became the Monopolies Commission on 31 October 1956. It was reconstituted with additional powers in 1965. In 1973, it became the Monopolies and Mergers Commission. On 1 April 1999, it became the Competition Commission and, on 1 April 2014, it became the Competition and Markets Authority. Do Civil Servants understand the significance of April Fools Day?
French governments have no such hang-ups about allowing national champions to prosper, often taking a shareholding to block any foreign takeover. We, instead, like to encourage foreign companies to take over parts of British companies that have become too large for the British market. There are exceptions such as Rolls-Royce, which are too valuable to our economy or security but smaller companies are fair game.
I heard it was something to do with the oil and gas part of the business in Aberdeen. Apparently the UK Monopolys and Merger committee have said that this part of the business can not go with the sale to Wood Group cos it would create too large a company in the UK and affect fair competition??? If this is true, maybe that's why the price difference between the wood and Amec Foster Wheeler shares is widening? Maybe the price needs renegotiating because of this?
I also heard that the nuclear part of Amec Foster Wheeler is not part of the sale (and never was). I don't know much about this part of the business or how big it is but I think it is UK and USA based? I don't know what is going to happen to this part of the business or if it will affect the share price / takeover??? All seem very confusing.
You were among a very small minority that voted against the takeover at the Court and General Meetings on Thursday, 15th June. Of the votes cast, just 0.08% were against.
Wood Group shares are now down at 655.0p. You might expect Amec to be at 75%of that (= 490.75p) but they are actually a little lower at 478.0p. Does the market expect the combined company to be worth less than the parts?
I wish I had sold my shares when the takeover was proposed.
As far as I know the offer from WG was for all of AMFW, and I am not aware of any changes to this deal. I have heard that AMFW may have to sell off part of their North Sea assets, as a result of the merger,but this is I believe a monopolies commission ruling. Can you be more specific about what is not included in the sale?
Is the Amec Foster Wheeler share price meant to track the Wood Group share price with a ratio of 0.75?
Seems like there is a lot of confusion in Amec Foster Wheeler at the moment regarding which parts of the business are not being sold to the Wood Group???? I thought is was all of it - lock stock and barrel - but apparently not? Maybe that's why the share price keeps changing if bits are being taken out of the sale.
"can someone please explain why the share price is not stable at around 564p which was the takeover price? Or at least 75% of the Wood Group price (724 * 0.75 = 543p at the time of writing)? "
Crossman1, a reason for this price disparity became evident to me yesterday when I took a look at Wood Groups details. Wood Group are paying a 22.5 US cents dividend to anyone holding shares on 6th April. Currently that is 18.2p, so WG shares should trade at 18p above your calculated value until the shares went ex divi on the 6th April.
However, that 18p margin has now passed, but today's calculations are even more out of sync.
Wood Group = 828.5p so AMFW should be (828.5 * 0.75 = 621.4p)
I too noticed the disparity between WG and AMFW' share prices at the weekend. AMFW shares had shot up by over £1 when the agreed take over was announced. Then dropped back to less than 10p above the sp prior to the offer.
Bearing in mind that both companies had announced contract wins since the TO announcement, they both looked like a good buy. However, as AMFW's sp was a good bit below 75% of WG I have bought into AMFW again. That way when the TO goes ahead, I will get more WG shares for my money.
Go back to January 2014 and what was then AMEC were so awash with cash a special dividend looked likely
No chance they bought the FW and on the slide since (ok oil took a dive but others survived)
Not looked at who was/ now are directors but i bet there gains are directly proportional to my losses
The fact that AMFW is lower propotional to the prices when the news broke is odd, but perhaps a lot of PI are selling because they don't fancy Wood and there small dividends
The takeover price was a fixed actual price it simply equated to that price at the time. However at some point your AMFW stake will be value at 0.75 x Wood which would now approx 550 so an almost 10% upside. I couldn't work it out so bought more AMFW (@ 510). It maybe off at the moment due to any uncertainties with the deal. Presumably it should creep nearer 0.75xWood as the merger nears.
Apologies in advance for being a bit stupid, but can someone please explain why the share price is not stable at around 564p which was the takeover price? Or at least 75% of the Wood Group price (724 * 0.75 = 543p at the time of writing)?
I don't recall any particular company announcing a rights issue in advance. I'm not sure there's even any legal requirement to do that. But it was a no-brainer that AMFW would almost certainly have gone down that route having failed to rein in their massive debt problem. It was only 2 years ago that they announced it was a priority to reduce their debt and install a plan to do that, but it never transpired.
Fiver.. got my reading glasses on now. And I only need AFW to rise another 15% to break even... Forgot to spreadsheet in my recent averaging down purchase.. which makes me feel a little better. At least it's not another Mouchel or WYG 'sink and phoenix' and screw the small shareholder!
Wood Group shares up too.. A good day for both holders.
The takeover comes after several years of pressure on the profits of service providers in the energy industry as the slide in oil prices forced their clients rein in spending and defer large projects. By merging, these engineering companies are aiming to cut costs, extend the scope of their business and become more competitive. Among recent deals, General Electric Co. agreed in October to merge its oilfield-services arm with Baker Hughes Inc.
Looks like a done deal - have a few of these in the bottom draw from the oil price crash waiting for a recovery. After today now a blue line in the portfolio.
Shares in Amec Foster Wheeler surged on Monday as it agreed the terms of an all-share offer from oilfield services company Wood Group that values the engineer at around £2.2bn.
Under the terms of the deal, Amec shareholders will receive 0.75 new Wood Group shares for each of their shares.
Apparently there is a reshuffle on the way, but no announcement until 2017? Meanwhile 650 employees have been identified for a cull. All seems a bit late in the day for this and very reactive, but that is what we have grown to expect with this management team. They must thik they are smarter than the ENRON guys??
I had high hopes for Lewis but just cannot see the light at the end of this very dark tunnel without URGENT and TOUGH decisions being made. Attempts to cut costs are a joke.
Time to find a new management team that has experience of tough times. Anyone can make money at $150 oil (and it only takes one CEO to pour it down the drain while the others nod in agreement). It's a lot harder to come back at $50 and clearly this team haven't got it.
AMEC needs an urgent clear-out of all of those executives who were responsible for the FW debacle and replacement with an experienced turnaround team to address COSTS. Then get after NEW and valuable business opportunities. Maybe a strategy to return decent profits to those shareholders who are taking the risks here.
I would like to know how much these EXECUTIVES have personally staked in their performance and who has been gifted share options (ie No risk downside / all upside). If they cannot put their OWN money into this company then why should we continue to support them. Their mortgages are being paid by shareholders again this year. Where is my return?
Expensive executives with clearly insufficient experience. Time we were given access to the salary and expense data for these people too. Many of them are being over compensated / rewarded for continually failing.
Spare a though too for the 650 staff who thought their managment was competent. They just took a 100% pay cut while these clowns thought that was an appropriate response to the market. Have they no shame?
Time for a change.......NEW management team or NEW CEO?
Poor quality management is the main problem here, not just over paying for FW (root cause) but the bungled integration and continued inability to find synergies across those units. Chasing minor cost savings of a few million here and there, is not the way to solve this.
This now needs an experienced executive at board level to turn this around and get shot of the current inexperienced management (and ALL of those who supported the previous CEO in the doomed moonshot). Samir is gone but his "drones" are all still here??
The new CEO needs to start showing investors that he is serious by showing the current (overpaid) managers to the exits and bringing in professional management. Maybe then we will back AMEC for a while longer, otherwise there are better places for my cash as of today!
That went down well. Trying to figure out why. Nothing really new there. Was the market expecting anything different? GPG sale execution risk previously highlighted. The only thing that really bugged me was:-
"We have not yet concluded our thinking on the right mix of investment and funding options which in aggregate will lead to an appropriate balance sheet and create a strong ongoing business."
What are they saying? Never confuse investors. It could even be construed as saying that we'll do a placing!
The latest interims would hardly suggest much room for optimism - negative operating cash flow of -£10m (2015 -£39m) and a loss before tax of -£440m under IFRS accounting (2015 £73m). Net debt continues to climb to £1084m (2015 £957m). And AMFW are facing an environmental negligence lawsuit from a Canadian mining company, but do not reveal what this might eventually cost them.
So not a pretty picture overall. So why the market is so enthusiastic is difficult to fathom. Only one positive thing has notably changed in the last 6 months, and that is the oil price which has partially recovered from below $30/bl to around $48$/bl (Brent). Perhaps it's pinning its hopes on this single factor, otherwise I'm baffled.
After some months of wild fluctuations below 500p the chart indicates a break-out above this level which seems to be holding. The 50 day ma is now rising for the first time in over 2 years and the sp has finally broken through it.. The fundamentals are being ignored but technically this is now a weak buy and a definite hold.
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