Oilfield service specialists John Wood Group plc and Amec Foster Wheeler plc, each based in the UK but with substantial reach in North America, have agreed to merge in an all-stock deal valued at $2.7 billion.

The takeover would create an engineering, procurement and contracting (EPC) giant with expertise from the upstream to the downstream, with an estimated market value of about $6 billion. The merger also offers a lifeline for Amec as it was facing a US$532 million rights issue and was planning to suspend its dividend. The rights issue has been called off as a result of the merger announcement.

Wood Group, based in Scotland, is eyeing expansions in the U.S. onshore as the region is expected to best benefit from the energy market upturn, CEO Robin Watson said during a conference call.

“We think we have positions in those parts of the oil and gas markets that will see growth first,” said Watson, who would retain his role once the merger is completed.

The company is seeing “early signs of improvement” in its core U.S. onshore market, particularly in the Permian Basin, Watson said. The North Sea, where the company had 40% of its revenue only two years ago, now accounts for about 20%. Wood Group’s 2016 revenue fell 16% year/year to $4.93 billion, with net income off 65% to $27.8 million.

In the U.S. oil and gas business, Wood Group’s onshore service spans upstream, midstream and downstream projects. It also designs and operates topsides for some of the largest and deepest offshore platforms in the world, from Northern Canada to the Gulf of Mexico.

The acquisition would dilute the company’s oil and gas unit to 60% from 85%; it had been 95% before the commodity collapse in late 2014. The weighting instead will increase for new businesses, such as engineering design services, power plant projects and consulting services for mining companies.

“We’re in a part of the cycle where having 60% oil and gas is a good place to be,” Watson said.

“The combination represents a transformational transaction for Wood Group, which accelerates our strategy and creates a global leader in project, engineering and technical services delivery across a range of industrial sectors,” said Chairman Ian Marchant, who will retain his position once the merger is complete. Wood Group CFO David Kemp also would remain in his role, while four Amec board members are to join a revamped board.

Amec Foster Wheeler was created in late 2014 in a combination of Amec plc and Foster Wheeler AG, as the commodity price plunge began to squeeze some operators. Amec, which counts BP plc, ExxonMobil Corp. and Royal Dutch Shell plc as clients, operates in 55 countries and is involved in every part of the project delivery phase across the oil and gas value chain from production to refining, processing and distribution of derivative products, to a range of chemicals services.

In the upstream market, Amec designs offshore and onshore platforms and topsides, floating facilities, gathering systems and processing facilities, pipelines and terminals. It also works in all phases of liquefied natural gas and gas monetization, including using methane, ethane and propane as chemical feedstocks.

“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,” Marchant said.

Initially, the combination would create an “asset-light, largely reimbursable business of greater scale and enhanced capability, diversified across the oil and gas, chemicals, renewables, environment and infrastructure, and mining segments,” he said. By leveraging the two companies’ asset lifecycle services across project delivery, engineering, modifications, construction, operations, maintenance and consulting activities, the combination “will be able to better capitalize on growth opportunities across a broad cross section of energy and industrial end markets.”

Following some poorly performing quarters, Amec overhauled its management team and last fall issued an internal review of its organization. Initial conclusions included reorganizing into four market-based business lines, reducing management and investing in systems and processes to enable the company to reduce its cost base by 2019.

The combination with Wood Group “allows our shareholders to benefit from the significant synergies and other strategic benefits that are expected to be realized from the combination,” said Chairman John Connolly.

The merger has been unanimously recommended by each board and would result in Wood Group owning 56% and Amec shareholders owning 44% of the combined firm.