AMEC Foster Wheeler has agreed to a takeover by Wood Group in a deal that brings together two of the UK's largest energy services companies, reported BBC.
Wood Group hopes to cut costs from the combined business, which will provide services to the oil and gas, chemicals and mining sectors.
Mark Wilson, an analyst at Jefferies, said to BBC: "While materially above our Amec valuation, we can see Wood Group consolidating its market-leading UK North Sea business, expanding product lines in the US and possibly increasing the scope for asset sales."
The deal has emerged at a difficult time for both businesses amid continued oil price volatility.
Amec was due to raise funds through a rights issue next week, although this has now been suspended.
The funds were due to be used to reduce its debt pile and for a reorganization of the company. It was formed by the merger of Amec and American firm Foster Wheeler three years ago.
Under the terms of the deal, Amec shareholders will end up with 44% of the larger group.
The management of Wood Group - chief executive Robin Watson, finance chief David Kemp and chairman Ian Marchant - will continue in their roles following completion of the deal.
Wood Group chairman Ian Marchant said: "The combination extends the scale and scope of our services, deepens our existing customer relationships, facilitates further development of our technology-enabled solutions and broadens our end market, geographic and customer exposure.
"Delivering significant sustainable synergies will also result in a leaner and more competitive combined group, creating value for shareholders."