Foster Wheeler Buys Siemens Environmental, Agrees to EPC Deal with OMV

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Since the announcement in January that a provisional agreement had been struck for AMEC (LSE:AMEC.L) (London, England) to acquire engineering and construction company Foster Wheeler (NASDAQ:FWLT) (Baar, Switzerland) for $3.2 billion, Foster Wheeler has been busy on its own acquisition trail. The AMEC deal is scheduled to be finalized in the second half of the year. Whether Foster Wheeler's strategic acquisitions and deals will affect the final details of the AMEC deal may be open to conjecture, but the to-be-merged companies are no doubt in close contact on all moves as the consummation date approaches.

In the second half of March, Foster Wheeler announced that a subsidiary of its Global Power Group had signed an asset purchase agreement with Siemens Energy (NYSE:SI) (Munich, Germany) to acquire the Siemens Environmental Systems and Services company, which supplies and services clean air technologies for use in power plants and industrial facilities. The deal is expected to be closed in the coming quarter.

Foster Wheeler reports that it has informed AMEC of the Siemens transaction and does not expect it to affect the timing of completion of the business combination of Foster Wheeler and AMEC.

The Siemens businesses design-engineer, retrofit and service a broad range of clean air technologies for power and industrial plants, including wet and dry flue gas desulfurization (FGD) and particulate control (fabric filters and electrostatic precipitators); acid gas control; mercury control; and NOx reduction and combustion optimization systems.

"This is a strategic acquisition that expands our capability to offer clean air products and services to our clients in both the power and industrial sectors," said Gary Nedelka, chief executive officer of Foster Wheeler 's Global Power Group. "It complements our existing portfolio of clean air products, and allows us to provide our clients with a full array of solutions to meet both tightening environmental regulations and the growing demand for energy on a global basis."

Days after the Siemens deal was reported, Foster Wheeler announced that a subsidiary of its Global Engineering and Construction Group had signed an alliance agreement with OMV (EUREX:OMVF.EX) (Vienna, Austria) to provide integrated project management and engineering, procurement and construction (EPC) management services.

Under the five-year agreement, Foster Wheeler will provide services on a privileged basis for the OMV refineries located in Burghausen, Germany, and Schechat, Austria. The services will be supplied on specific work orders and include front-end loading for projects of any size, as well as EPC management services for projects up to a specified threshold limit, with respect to total installed cost.

"By consistently delivering safe and successful projects for OMV, we have established the right basis for a longer-term relationship with our client," said Roberto Penno, chief executive officer of Foster Wheeler's Global Engineering and Construction Group. "We are very pleased to have signed this five year agreement."

For related information, see January 16, 2014, article - Amec's $3.2 Billion Acquisition of Foster Wheeler Fits Complementary Markets, Strengths.

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