Amec Foster Wheeler (AFW) has agreed to a £2.2 billion share-only takeover from Wood Group.
The two firms will merge into a single £5 billion business, which will provide services to the oil and gas, alternative energy, chemicals and mining industries.
Wood Group said it expects opportunities for cost and revenue synergies in the region of £110 million a year, which would provide a “significant shareholder value creation opportunity”.
AFW shareholders will form approximately 44% of the share capital of the combined group.
Wood Group’s directors will stay at the helm of the new firm, with Robin Watson as CEO and David Kemp as CFO.
Ian Marchant, Chairman of Wood Group, said: “The combination represents a transformational transaction for Wood Group, which accelerates our strategy and creates a global leader in project, engineering and technical services delivery across a range of industrial sectors.
“The combination extends the scale and scope of our services, deepens our existing customer relationships, facilitates further development of our technology-enabled solutions and broadens our end market, geographic and customer exposure.”