Oil services company Wood Group and rival Amec Foster Wheeler were closer to completing their proposed merger after the UK´s competition authority gave a provisional thumbs-up to the deal.
The Competition and Markets Authority (CMA) said there were “reasonable grounds” to believe that undertakings by the firms would be enough to waive through the £2.2bn merger.
It means the duo are on course to complete the merger before the end of the year, with a full competition probe set to be averted.
Earlier this month, the CMA claimed the proposed takeover of Amec Foster Wheeler by Wood Group raised issues and warned the deal could potentially be subjected to a lengthy investigation.
The regulator gave the companies until the 9 August to come up with solutions to allay the competition worries surrounding “the supply of engineering and construction services and operation and maintenance services in the UK continental shelf.”
The merger will reduce the number of competing firms in this particular market from four to three.
Both companies are active in the UK´s North Sea and have come under pressure along with the industry as a whole from lower oil prices.
However, the CMA appears to be satisfied with the companies´ proposal to sell off nearly all of Amec Foster Wheeler´s Upstream Offshore oil and gas business in the UK.
“The CMA considers there are reasonable grounds for believing that these undertakings, or a modified version of them, might be acceptable and it will open a public consultation on the offer in due course,” said the regulator in a statement.
The CMA is expected to give the formal green light for the merger by 12 October 2017. It can however extend the deadline for its decision until 7 December 2017 if “special circumstances” arise.
Amec Foster Wheeler said the sale of assets to allay the CMA´s earlier concerns were already at an “advanced stage”, with a formal marketing process having secured interest from potential buyers.
The two firms claimed the merger was on course to be sealed during the fourth quarter of 2017; the CMA has not stipulated that the Amec asset sales need to be finalised before the deal´s completion.