British oilfield services company John Wood Group has agreed to buy Amec Foster Wheeler in a deal valuing its smaller rival at about 2.2 billion pounds (US$2.7 billion) and averting a planned 500 million pound rights issue.

Companies in the industry have had to adjust to lower prices after oil tumbled from a peak of more than $100 a barrel in 2014.

The paper deal valued Amec Foster Wheeler shares at 5.64 pence each and they traded close to that level at 1010 GMT. Wood Group shares also responded positively, gaining 5% to 7.93 pounds.

Amec Foster Wheeler, itself the product of a 2014 merger, said it had been planning to announce a rights issue next week and to announce the suspension of dividend payments to cut costs and boost cashflow. The rights issue has been suspended.

“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,” Wood Group Chairman Ian Marchant said.

Amec Foster Wheeler investors will receive 0.75 new Wood Group shares for each share held, the company said. They will own 44% of the merger group but Wood Group executives will take the top jobs.

Wood Group CEO Robin Watson and CFO David Kemp will keep the same jobs in the new group. Wood Group Chairman Marchant will also retain his role.

Wood Group said it expected annual cost savings to reach at least 110 million pounds, while the one-off costs would be around 190 million pounds.

“While materially above our AMFW valuation, we can see WG consolidating its market-leading UK North Sea business, expanding product lines in the US and possibly increasing the scope for asset sales,” Jefferies analyst Mark Wilson said.

Oilfield service companies have looked to acquisitions to offset weak demand and heavy discounting for its equipment and services due to several years of low crude prices.

General Electric Co. agreed to merge its oil and gas business with Baker Hughes Inc. in October to create the world’s second-largest oilfield services provider.

Larger rival Halliburton Co. had earlier tried to buy Baker Hughes to compete for customers with Schlumberger NV, the world’s largest oilfield service provider.

JPMorgan acted as lead adviser to Wood Group, securing a key role on another big U.K. deal this year after Standard Life's merger with Aberdeen and Tesco's purchase of Booker.

Credit Suisse, which works with Wood Group as corporate broker, also helped the company on the deal while Goldman Sachs advised Amec Foster Wheeler. ($1 = 0.8188 pounds)