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Foster Wheeler announces non-binding terms with AMEC
Jan '14
Foster Wheeler AG confirmed that, following a comprehensive review of strategic alternatives, it has provisionally agreed with AMEC plc (“AMEC”) on non-binding outline terms concerning a possible business combination of the Company and AMEC. While the Company does not generally comment on pending negotiations, confirmation is in response to the recent announcement by AMEC.

The Company and AMEC have negotiated non-binding terms of a business combination pursuant to which AMEC would acquire each outstanding share of Foster Wheeler common stock for transaction consideration consisting of 0.8998 shares of AMEC common stock and $16.00 in cash. In addition, assuming binding terms are agreed, the Company expects to pay a one-time dividend of $0.40 per share prior to closing.

Based on AMEC's stock price of £10.79 per share (the close of trading on Friday, January 10, 2014) and an exchange rate of £/$1.648, the proposed transaction would value each Foster Wheeler share at approximately $32.40 and the fully diluted share capital of Foster Wheeler at approximately $3.3 billion (taking into account the proposed $0.40 dividend by the Company).

This represents a premium of approximately 12.8% to $28.73, the Company's closing stock price on November 26, 2013, the trading day prior to initial public reports about a potential business combination involving the Company and AMEC, and a premium of approximately 19.4% to the 3-month volume weighted average price (measured for the three-months ending on November 26) of approximately $27.15.

The Company believes that the meaningful equity component of the proposed terms would allow its shareholders to participate in the strategic and commercial benefits of the combined company, including significant potential synergies. Under the proposed terms, Foster Wheeler’s existing shareholders would own approximately 23% of the combined company, and it is expected that two members of the Company’s board would join the board of directors of AMEC as non-executive directors.

In connection with their negotiations, Foster Wheeler has agreed with AMEC not to solicit alternative proposals through February 22, 2014.

Other than with respect to non-solicitation of alternative proposals, no binding agreement has been entered into between the Company and AMEC with respect to any business combination, and the execution of definitive agreements with respect thereto is subject to mutual agreement of definitive terms, mutual due diligence and approval by each of the Company's and AMEC's board of directors, among other things.

Accordingly, readers are cautioned that there can be no assurances that any transaction will ultimately be agreed between Foster Wheeler and AMEC, or what the definitive and binding terms of any such transaction would be.

Foster Wheeler

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