The proposed £250 million acquisition of a major player in the clean-up of the Sellafield site in West Cumbria could be blocked.

The Competition and Markets Authority (CMA) has launched an investigation into global engineering firm Jacobs’ acquisition of Wood Nuclear Limited – the nuclear arm of the Wood Group.

The proposal deal – announced in August last year – would see Wood Nuclear Limited along with “subsidiary and certain affiliated companies” come under control of Jacobs’ UK division.

Jacobs would also take on existing contracts held by the business – which include managing the Design and Engineering lot for the Programme and Project Partners (PPP) framework.

The 20-year contract awarded last year by Sellafield Limited as part of its push to “revolutionise” the decommissioning of the site, could be worth up to £769 million.

Wood’s nuclear division is already a long-standing big tier company at Sellafield and, in December was awarded a £50m contract to provide programmable digital control technologies to the plant.

The group employs 1,300 people in the North West, including staff at bases in Sellafield and Whitehaven.

However, the CMA has raised concerns over the proposed deal and has launched a Phase 1 investigation – inviting “interested parties” to comment before the deadline of January 22.

In a statement, the CMA said it “is considering whether it is or may be the case that this transaction if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.

Wood and Jacobs had pre-empted the move by the CMA.

On announcing the deal, they confirmed that Jacobs will pay Wood a fee of £7.5m if the watchdog does not clear the transaction.

A spokesman for Wood said: “The CMA inquiry is part of the process before the deal can formally complete.

“We were fully expecting this announcement and await the outcome of their inquiry.”

Wood’s decision to sell its successful nuclear arm was a surprise to many, although its chief financial officer David Kemp explained it was part of a wider divestment plan to help the group reduce its debt.

The group recently reported a net debt of £1.46bn – which includes the debt it took on following the acquisition of Amec Foster Wheeler two years ago.

Mr Kemp added: “Although our nuclear business is a strong UK player and has performed well, we see better opportunities to develop clear global leadership positions across other parts of our business.”

Jacobs was unavailable for comment at the time of writing.

The statutory deadline for Phase 1 of the CMA enquiry has been set as March 4, although the regulator said that could change “during the merger assessment process due to different reasons”.

The Phase 1 period typically includes an invitation to both parties to address any concerns raised during the invitation to comment period.

Should the CMA’s concerns not be addressed, the case would move to Phase 2, which involves a group of independent CMA panel members carrying out an in-depth investigation.