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Norway's Acergy has announced an acquisition that will create a major new oil and gas engineering firm.

The company will buy out rival Subsea 7, creating a company of 12,000 employees and worth $5.4bn (£3.6bn).

Acergy built what was the world's longest underwater gas pipeline in 2006, connecting the UK to Norwegian North Sea gasfields.

Markets took the news well, with Acergy shares up 11% in early Monday trading, while its target Subsea 7 was up 12%.

The buyout on the Oslo stock exchange will be an all-share offer, meaning that Acergy will not need to raise any cash to complete the deal.

The companies expect the deal to result in cost savings of at least $100m per year.