Doubts surface over oil merger as probe launched into Amec

Shares in oil firms John Wood Group and Amec Foster Wheeler dived on Wednesday after fraud cops launched a corruption probe into Amec.

Wood shares fell 10% to 561p from 623p and Amec’s fell 6% to 426.5p after the Wood said it was “not possible” to estimate the impact of the probe on Amec.

The Wood statement, drafted by the company last night and issued this morning, jarred with an Amec statement issued at 6pm last night, which said the investigation was “not expected to have an impact on the completion of the deal”.

Numis said: “This in our view introduces some scope for deal-completion uncertainty, and to the extent the deal comes under doubt, it will likely be taken as a negative for Amec shares.” Wood has previously been more bullish on the deal despite the SFO probe, which it flagged as a possible risk months ago.

Wood chief financial officer David Kemp earlier said it “understood the risk” of the investigation before making an offer to buy Amec in March.

Analysts also felt the SFO woes would not hit the merger, with RBC Capital analyst Victoria McCulloch calling the share price slide a “slight overreaction”.

“Management were aware of this and don’t see the legal issues as a concern to prevent the deal,” she added.

The SFO investigation is tied to its larger probe into Monaco-based engineering company Unaoil.