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Recommended Takeover Offer from Foster Wheeler

13 March 2014


  • Recommended takeover offer from global engineering and construction group Foster Wheeler
  • Offer price of £1.70 cash per MDM share
  • Foster Wheeler to acquire all of the ordinary shares and options in issue in a cash transaction of approximately £65.3 million (US$109 million)
  • Cash offer represents an attractive premium to recent share price trading levels and provides realisation of value for MDM shareholders
  • Shareholders representing 42.4% of the issued ordinary shares of MDM have executed agreements under which they have agreed to vote in favour of the Offer
  • Offer subject to MDM shareholder approval and other conditions including competition approval

MDM Engineering Group Limited (AIM:MDM) is pleased to announce that it has entered into a merger implementation agreement (“MIA”) with Foster Wheeler AG (Nasdaq: FWLT) (“Foster Wheeler”) under which Foster Wheeler’s BVI subsidiary, Foster Wheeler M&M Limited, will acquire all of the ordinary shares in MDM, subject to MDM shareholder approval and certain other conditions  (the “Offer”, the “Transaction” or the “Merger”).

Under the terms of the Merger, MDM shareholders will be offered £1.70 cash for each MDM share they hold (the “Offer Price”).    
The Offer Price of £1.70 cash per share represents:

  • A premium of 14.5% to MDM’s closing price on 12 March 2014 of £1.485;
  • A premium of 17.4% to the 30-day VWAP prior to 12 March 2014 of £1.45; and
  • A premium of 17.3% to the 90-day VWAP prior to 12 March 2014 of £1.45.

Each of the directors of the MDM Board recommends to the MDM shareholders that, in the absence of a superior proposal, which has been defined in the MIA, they vote in favour of the Merger.  Each of the MDM directors who are shareholders in MDM has undertaken to vote in favour of the Merger in respect of their own MDM shares pursuant to their respective voting deeds.

MDM shareholders representing approximately 42.4% of the total number of MDM shares in issue have executed voting deeds, pursuant to which they undertake to vote in favour of any resolution submitted to MDM shareholders for their approval in connection with the Merger, provided that the MIA has not been terminated in accordance with its terms (including in the event of a superior proposal). 

The Transaction is subject to certain conditions precedent including obtaining MDM shareholder approval of the Merger at an extraordinary general meeting of the Company (“EGM”), securing required regulatory approvals (including clearances from the South African Competition authority and the Tanzanian Fair Competition Commission) and no material adverse changes or certain prescribed events (as defined in the MIA) having occurred in relation to MDM’s business. A summary of the key terms of the MIA is set out in Appendix I to this announcement.

The MIA also contains customary deal protection mechanisms, including no shop and no talk provisions, a matching right for Foster Wheeler in the event of a competing proposal and a mutual break fee payable in certain circumstances of 1% of the aggregate of the total consideration offered by Foster Wheeler to implement the Merger (see paragraph 7 of Appendix I). The MIA also contains customary restrictions on the conduct of MDM’s business prior to implementation of the Merger, which will take effect on the issuance of a certificate of merger by the BVI Registrar of Companies (“Registrar”) following the filing of the Articles of Merger with the Registrar (“Completion”). 

Foster Wheeler will also make an offer to acquire all outstanding options held over the shares of MDM (“MDM Options”). The MDM Options shall be cancelled upon implementation of the Merger and each option holder shall be paid cash consideration for their MDM Options calculated in accordance with the formula set out in Appendix I. 

The Notice of EGM containing information relating to the proposed Merger and details of the EGM is expected to be despatched to MDM shareholders by the end of March 2014, with the EGM in relation to the Merger expected to be held on or around 11 April 2014.  Subject to the approval of the Merger by MDM shareholders and timely satisfaction of the conditions precedent, MDM expects the Transaction to be completed in late August 2014.

It is intended that, immediately following the implementation of the Merger the admission to trading on the AIM Market of the London Stock Exchange of MDM’s ordinary shares will be cancelled.  Further details of the timetable for such cancellation will be advised in due course. 

As announced, on February 13, 2014 Foster Wheeler entered into a definitive agreement with AMEC plc (“AMEC”) concerning a possible business combination of Foster Wheeler and AMEC. Foster Wheeler has informed AMEC of the Transaction.  Foster Wheeler does not expect the Transaction to affect the timing of completion of the business combination of Foster Wheeler and AMEC.

Commenting on the Transaction, MDM Chairman, Mr Bill Nairn said:The MDM Board view the offer from Foster Wheeler as providing MDM shareholders with the certainty of 100% cash at a significant premium to MDM’s prevailing share price. Foster Wheeler is a pre-eminent global engineering company and we believe that this offer endorses the quality of the MDM business and its prospects in Africa. ” 

Commenting on the Transaction, MDM Chief Executive Officer, Mr Martin Smith said:The merger with Foster Wheeler provides an unparalleled opportunity for continued growth of MDM and its staff via the ability to leverage Foster Wheeler’s global network of world class engineering specialists, systems and procedures, and significant balance sheet strength. We see the merger as providing MDM’s employees and clients enhanced opportunities for ongoing development and growth as well as an excellent opportunity for shareholders to crystallise value at a significant premium.” 

Kent Masters, Foster Wheeler’s Chief Executive Officer, said, “MDM Engineering is a strong fit for Foster Wheeler’s minerals and metals strategy to enhance global capability and capacity.”


GMP Securities is acting as MDM’s exclusive financial advisor in relation to the Transaction.

Memery Crystal LLP and Carey Olsen are acting as MDM’s legal advisors in the United Kingdom and British Virgin Islands respectively in relation to the Transaction.

Canaccord is MDM’s Nominated Advisor and Broker.

Barclays is serving as exclusive financial advisor and Latham & Watkins LLP and Conyers Dill & Pearman are serving as legal advisors to Foster Wheeler.


MDM Engineering Group Limited

Martin Smith (CEO)
George Bennett (Executive Director)

Tel: +27 (0) 11 993 4300

Canaccord Genuity Limited
NOMAD and Broker

Neil Elliot
Chris Fincken

Tel: +44 (0)20 7523 8000

Tavistock Communications
Financial Public Relations and Investor

Emily Fenton
Jos Simson

Tel: +44 (0)20 7920 3150

ABout Foster Wheeler:

Foster Wheeler AG (Nasdaq: FWLT) is a global engineering and construction company and power equipment supplier delivering technically advanced, reliable facilities and equipment. The company employs approximately 13,000 talented professionals with specialized expertise dedicated to serving its clients through one of its two primary business groups. The company’s Global Engineering and Construction Group designs and constructs leading-edge processing facilities for the upstream oil and gas, LNG and gas-to-liquids, refining, chemicals and petrochemicals, power, minerals and metals, environmental, pharmaceuticals, biotechnology and healthcare industries. The company’s Global Power Group is a world leader in combustion and steam generation technology that designs, manufactures and erects steam generating and auxiliary equipment for power stations and industrial facilities and also provides a wide range of aftermarket services. The company is based in Zug, Switzerland, and its operational headquarters office is in Reading, United Kingdom. For more information about Foster Wheeler, please see

Barclays Bank PLC, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for Foster Wheeler and no one else in connection with the Transaction and will not be responsible to anyone other than Foster Wheeler for providing the protections afforded to its clients or for providing advice in relation to the Transaction or in relation to the contents of this announcement or any transaction or any other matters referred to herein.



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