Worleyparsons Limited (ASX: WOR) shares are locked in a trading halt as the engineering firm prepares to raise capital to buy AFW UK Oil & Gas Limited for $303 million.
Worleyparsons shares closed at $14.24 on Friday, the highest price it has traded at since October 2014.
The AFW UK Oil & Gas Limited deal is to be funded by a 1 for 10 entitlement offer of about $322 million and existing WorleyParsons debt facilities, according to the company.
WorleyParsons CEO Andrew Wood said the 100% acquisition of AFW UK, the former upstream oil and gas assets of Britain's Amec Foster Wheeler Plc, fits with WorleyParsons' strategy to build a global maintenance, modifications and operations business.
"AFW UK is a world class integrated solutions business with best in class MMO capabilities and an excellent track record of international expansion," Mr Wood said.
"We look forward to combining AFW UK's capabilities with our international platform to create a global MMO business capable of driving medium term growth."
Worleyparsons said the combination of the acquisition and the entitlement offer, which will see about 24.8 million new shares issued, is expected to be EPS accretive in the first year of ownership.
The company said the deal is due to be finalised by the end of October.
Worleyparsons made a $33.5 million net profit on revenues of $4.4 billion for the full year ending June 30, 2017.
Upon completion of the deal, Amec Foster Wheeler Plc should receive regulatory approval for its merger with Wood Group.
Britain's Competition and Markets Authority said earlier this year the prospective merger raised competition concerns which could be alleviated if Amec offloaded its upstream offshore oil and gas servicing assets.
Some analysts have set their 12-month price targets for WorleyParsons shares at above $16.
But more conservative estimates are hovering around $13.81, representing a 3% decrease on the latest price of $14.24.
