Sidara has said it will not be pursuing its takeover bid of Wood (LON: WG) “in light of rising geopolitical risks and financial market uncertainty”.
The Middle Eastern firm said that it “does not intend to make a firm offer for Wood” after being granted an extension to make a final offer by the Aberdeen engineering firm last week.
Wood shared: “The board is grateful for the substantial engagement of its shareholders and the support of its clients and employees throughout this process.
“The management team looks forward to continuing to deliver against the strategy set out in November 2022.”
Since this morning’s announcement, Wood’s share price fell 35%. Wood stock closed down at 128p per share. This represents a slump in value of more than £477m.
On 3 July Sidara had made a “‘final offer” in a previous bid to acquire Wood at 230p per share due to be decided by 31 July.
On Wednesday Wood pushed back the “put up or shut up” date for Sidara’s takeover bid by a week as it said discussions “remain ongoing.”
Now Sidara, also known as Dar Al-Handasah Consultants Shair and Partners, had until close of play on 9 August to make a final offer under takeover rules.
Wood explained: “Following an extended period of detailed engagement, Sidara confirmed to Wood on 2 August 2024 that it had completed its due diligence.”
This was the second time the takeover bid deadline has been pushed back by the Aberdeen headquartered firm.
Ashley Kelty, director and research analyst for oil and gas, commented: “While this is disappointing for WG investors, it will allow management to refocus on delivering the strategy goals and deliver the long term growth objectives.”
On the “financial market uncertainty” Sidara mentioned, the UK oil industry has been rallying against the new Labour government’s changes to the already controversial energy profits levy (EPL), or windfall tax.
Last week Labour upped the EPL rate by three percent, bringing the headline rate of tax imposed on UK oil firms to 78%.
CEO of trade body Offshore Energies UK, David Whitehouse said: “These announcements were made without meaningful engagement with this sector to understand the impacts.”
On Monday, Serica Energy’s chairman David Latin argued that this move will lead to firms like his cutting UK investments.
Latin said North Sea oil and gas production is “declining anyway” and will “fall off much more rapidly and fields will close much earlier.”
Improving shareholder opinion
Last month the Aberdeen headquartered engineering business shared a trading update which left much to be desired by shareholders.
At the time Zoe Gillespie, investment manager at RBC Brewin Dolphin, explained: “Speculation continues around Wood’s future, with Sidara having to make an improved offer or drop its bid to buy the company by July 31.
“The most recent bid valued Wood at a 52% premium to its current share price, putting pressure on the management team to deliver on plans to reverse the engineering group’s fortunes, after the share price fell to levels last seen in 2009.”
Wood’s recent half year trading update showed adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the first half of 2024 of around $210million (£163.6m), up around 4%.
The firm’s order book is also up by 2%, however, its revenue is down by 6%.
On revenues, the firm argues that it has “good growth in operations” which are being offset by “expected lower revenue in projects” as a result of its “strategic shift away from EPC work, lower pass-through activity and ongoing weakness in our minerals business.”
Recommended for you
