Aberdeen-headquartered engineering services company Wood Group (LON: WG) has once again found itself a takeover target after rejecting a bid from Lebanese engineering firm Sidara.
In a statement, the company’s board confirmed that it received an unsolicited, preliminary and conditional proposal from Dar Al-Handasah Consultants Shair and Partners, as Sidara is also known, for $1.65 billion.
The proposal covered a possible cash offer to acquire the entire issued and to be issued ordinary share capital of Wood.
The proposal was received on 30 April 2024 and proposed an offer price of 205 pence per Wood share.
Wood Group’s share price was around 160 pence at the start of trading today, but rose as news of the takeover bid was announced, breaching 200 pence before settling around the current 190 pence.
The board carefully considered the proposal, together with its financial advisers, and concluded that it fundamentally undervalued Wood and its future prospects.
Accordingly, the board rejected the proposal unanimously on 8 May 2024.
In a statement, Sidara said that it is considering its next steps. It added that while further announcements will be made in due course as appropriate, “there can be no certainty that an offer will ultimately be made”.
It comes over a year since Wood Group was approached by US private equity giant Apollo Global Management, which was looking to takeover the company.
After starting at 200p per share, lodged on January 11, Apollo’s final offer was 240 pence per share, reportedly valuing the firm at £1.66bn.
Ultimately, Wood rejected the bids and Apollo pulled out in May last year.
At the time, Wood said it was confident about its strategic direction and long-term prospects. The company expanded its order book in 2023 to approximately $6.3bn, up 7% on a “like-for-like” basis.
In addition, revenue reached $5.9bn, an increase of 8.8%, with the company posting an adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) figure of $423m.
The company launched a cost-cutting drive earlier this year, looking to deliver savings of $60mn from 2025. Wood is looking to cut its $1.1bn net debt, which increased by 49% in 2023.
Last month, Wood shareholder Sparta Capital Management called for the firm to explore a sale or list in the US over its “poor” share price.
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