Foster Wheeler to Acquire Siemens Environmental - Analyst Blog

Foster Wheeler AGFWLT recently announced that its Global Power Group's subsidiary will be acquiring Siemens Environmental Systems and Services business from Siemens Energy, Inc. The financial terms of the deal were not disclosed. However, the transaction is expected to close in the second quarter of 2014. Wheelabrator Air Pollution Control and Advanced Burner Technology Company, which were earlier acquired by Siemens Environmental, will also be a part of Foster Wheeler, post this acquisition.  

Siemens Environmental primarily provides comprehensive solutions for clean air technologies including desulfurization solutions for both wet and dry flue gas FGD, particulate control solutions for fabric filters and electrostatic precipitators, controlling acid gas and mercury as well as solutions for NOx reduction and combustion optimization systems.

Air pollution control and industrial ventilation products command a multi-billion dollar market, which is still witnessing rapid growth. The rising demand for clean air and water as well as an environment free of industrial pollutants are the primary factors behind this booming industry.

Moreover, most of the governments are tightening regulations for controlling air pollution. Thus the companies in this industry are compelled to upgrade technologies to meet the stringent environmental criterion.

This acquisition is a strategic move by Foster Wheeler to broaden its existing portfolio, thereby enabling it to not only provide competent solutions but also strengthen its presence in the air pollution control industry.

This deal comes after Foster Wheeler's announcement of it being acquired by AMEC plc on Feb 13. As per the agreement, AMEC will be acquiring all the issued and to-be-issued share capital of Foster Wheeler for about $3.3 billion or $32.69 per share.

However, the AMEC deal is presently under scrutiny by many securities litigation firms for any possible judiciary infringement. Recently, Levi & Korsinsky, LLP alleged a possible violation of fiduciary duties in the deal, following which a complaint was filed.

Foster Wheeler currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the engineering and heavy industry worth a look include AECOM Technology Corp. ACM, Quanta Services, Inc. PWR and VSE Corp. VSEC. All three stocks have a Zacks Rank # 2 (Buy).