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Foster Wheeler announces non-binding terms with AMEC regarding potential merger

Foster Wheeler (FWLT) confirmed that, following a comprehensive review of strategic alternatives, it has provisionally agreed with AMEC plc (AMCBY) 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, today’s 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 40c per share prior to closing. Based on AMEC's stock price of GBP 10.79 per share, the proposed transaction would value each Foster Wheeler share at approximately $32.40 and the fully diluted share capital of Foster Wheeler at approximately $3.3B, taking into account the proposed 40c 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 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.