Aberdeen’s Wood ready to recommend non-binding takeover offer from Sidara to shareholders

Aberdeen-headquartered Wood has confirmed it has received a non-binding takeover bid from Dubai-based rival Sidara.

In an update to the London stock exchange, Wood said its board has received an offer from Sidara valuing the firm at 35p per share, or around £240 million.

Wood’s share price currently stands at around 25p after falling just over 80% in the past six months.

The “holistic non-binding conditional proposal” also includes a possible capital injection of $450m (£343m).

It would also require Wood to seek an extension of, and “certain other amendments to”, its existing committed debt facilities.

In its update, Wood said work continues on a “range of alternative refinancing options” to provide the company with an “appropriate and sustainable long-term capital structure”.

However, Wood said its board currently believes that the Sidara offer “represents the better option” for the company’s shareholders, creditors and other stakeholders.

As a result, the Wood board “would be minded to recommend” Sidara’s offer to its shareholders should it receive a firm offer for the company.

Wood said the proposed takeover “would create a leading global engineering consulting company with enhanced scale, capability and diversification”.

Wood’s financial woes

The non-binding offer comes after the two firms re-entered takeover talks in February this year after Sidara dropped a previous takeover bid in August last year.

Sidara’s previous “final offer” valued the company at 230p per share, valuing Wood at around £1.5bn.

© DC Thomson

Wood’s share price has plummeted in recent months after unveiling half year losses of $983m in August.

A review of contracts from recent years released in March also identified “material weaknesses and failures” in the financial culture of the Aberdeen firm.

The “weaknesses and failures” identified by Deloitte included “inappropriate management pressure” and “over-optimism and/or lack of evidence” in respect of accounting judgements.

These “cultural failings” led to instances of information being “inappropriately withheld” and “unreliable information” being provided to Wood’s auditors.

The review was released after former Wood chief financial officer Arvind Balan was forced to resign after misrepresenting his qualifications.

Sidara and Wood

Wood said Sidara has made “significant progress” with its due diligence regarding the possible takeover, including in relation to the independent review of Wood’s finances.

Any firm offer from Sidara would be subject to certain pre-conditions, Wood said, including a unanimous recommendation from Wood’s board to support the takeover.

The deal would also include a cash injection of $450m from Sidara to assist Wood in handling its debts.

This includes an initial tranche of $250m upon Wood’s shareholders approving the takeover offer, and a further tranche of $200m upon completion.

Wood said the proposed combination is an “attractive proposition” for its customers and employees.

© Supplied by Harbour Energy

“Sidara’s long-term strategic commitment to the energy transition, combined with its complementary end markets and strong geographic reach – particularly in the US and Middle East – is expected to enhance Wood’s established market-leading position and create opportunities for sustainable, scalable growth,” Wood said in a statement.

Meanwhile, the Aberdeen firm said the deal would offer “opportunities” for its nearly 35,000 employees spread across 60 countries.

Wood said Sidara “recognises the value of Wood’s talent” and if the takeover completes, the Dubai-based firm “intends to support Wood in taking action to retain and support employees”.

“Together, Sidara and Wood would build a stronger, more resilient company, well positioned to continue delivering for clients, creating opportunities for employees and holding a world-leading position in the global energy and materials markets,” Wood said.

Wood takeover saga

The Sidara takeover saga comes after US private equity group Apollo Global Management attempted its own takeover of Wood in 2023.

After starting at 200p per share, 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 from talks.

Sidara stepped in with an unsolicited takeover bid in May 2024 at an initial price of 205p per share, valuing Wood at around $1.65bn.

After months of uncertainty, and a final offer at 230p, Sidara stepped away from its initial bid in August.

However, Sidara returned in February this year with a fresh bid which the Wood board now looks far more likely to accept.

Founded by Scottish billionaire Sir Ian Wood in 1982, the company grew alongside the oil industry in the North Sea to become one of the largest global energy services firms.

Who is Sidara?

Formerly known as Dar Group, the company rebranded to Sidara in December 2023 to coincide with the COP28 conference in Dubai.

Jordanian businessman Kamal Al-Shair founded the company as Dar Al-Handasah in Lebanon in 1956 alongside three engineering colleagues at the American University of Beirut.

The firm gradually expanded operations in the Middle East and North Africa in the 60s and 70s, and made its first acquisition of US firm Perkins & Will in 1986.

Sidara expanded in to the UK with the acquisition of Penspen in London in 1990.

According to its website, Sidara now operates in 60 countries with close to 20,500 employees across 308 offices and 21 group companies.

The firm posted $2.8bn in revenues in 2023, and is privately owned with around 44 shareholders.

In the UK, Sidara is working on projects including the EET Hydrogen Hub near Liverpool and the Humber low carbon industrial cluster project.

Internationally, Sidara is also working on large scale projects including the New Administrative Capital in Egypt and expansions to airports in Jeddah, Saudi Arabia, and Shanghai, China.