Aberdeen firm Wood sees £450 million wiped off its value as takeover bid collapses

Shares in the engineering giant dropped by more than a third as the stock market reacted.

By Alex Banks

August 5 2024, 11:13 am

Wood Group HQ in Altens. Image: Kenny Elrick/DC Thomson

Aberdeen company Wood saw a collapse in its share price as a buyer walked away from a takeover deal.

Dubai-based engineer Dar Al-Handasah, known as Sidara, has been pursuing Wood for months.

Wood opened its books for due diligence after Sidara’s most recent £1.6 billion bid for the business in June.

But Sidara has confirmed to Wood it won’t be pursuing the acquisition “in light of rising geopolitical risks and financial market uncertainty”.

Wood share prices dropped 38% from Friday’s closing price of £1.97 to £1.21 this morning.

The adjustment wipes £450 million from the value of the company which now has a market cap of under £900m.

Previous offers

Sidara’s initial approach on April 30 was worth £2.05 per share. It followed that up on May 14 with a proposal worth £2.12 per share.

On May 24 it said it was willing to pay £2.20 for each unit of stock – which Wood said it was “mulling over”.

In February, Wood confirmed it was cutting 22 jobs in Aberdeen as it looked to “drive efficiency” in the way it works.

Wood board ‘remains confident’ in strategy despite £450 million drop in value

In a stock market statement, Wood confirmed Sidara completed its due diligence on August 2.

The firm’s board was notified by Sidara this morning it didn’t intend to make an offer.

Sidara announced it has submitted a bit on May 29 at a final price of £2.30 per share as the “final proposal”.

Wood remains an active player in the UK North Sea. — Aberdeen-based Wood is an active player in the UK North Sea. Image: Wood

Wood told investors: “The board was notified by Sidara this morning that it does not intend to make an offer for Wood in light of rising geopolitical risks and financial market uncertainty.

“The board remains confident in Wood’s strategic direction and fundamental prospects.

“As set out in the HY24 trading update on 11 July, the growth strategy continues to deliver, with further growth in earnings before interest, taxes, depreciation, and amortisation (EBITDA), margins and order book in the first half.

“As we look ahead, we remain focused on delivering our potential, including generating significant free cash flow next year.

“We are pleased to reconfirm our outlooks for both this year and 2025.

“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.”

Wood will publish its half-year results on August 20.