Wood Group shares surged higher on Monday after the company announced that the board favoured the acceptance of a 35p offer for the company by Middle East-based global engineering consultancy Sidara.
The board of Wood has indicated it would be “minded to recommend” the possible offer to shareholders, subject to finalisation of terms and conditions.
Wood Group shares were 12% higher at the time of writing, despite the low offer being a major kick in the teeth for most long-term Wood Group shareholders.
As part of the deal, Sidara would inject $450 million of desperately needed fresh capital into Wood, whilst also seeking extensions and amendments to Wood’s existing debt facilities.
The deal has many characteristics of a bailout, but Wood Group’s poor finances leave it with few options.
Wood said that despite ‘having carefully considered the viability of these options together with its financial advisers, the Board of Wood currently believes that the Possible Offer represents the better option for Wood’s shareholders, creditors and other stakeholders.’
The deal preserves some value for Wood Group shareholders, but many will be disappointed if the deal is done at 35p after Sidara offered more than 200p not too long ago. However, the risk of serious of financial difficulties is now too great for the Wood Group board to be fussy about the price they secure.
Founded in 1956, Sidara has evolved over nearly seven decades into a privately-owned global partnership comprising 21,500 specialists across 350 offices in 69 countries. The group, which rebranded from its previous identity in 2023, encompasses architects, engineers, consultants, designers and project managers. Notable brands within the Sidara Group include Dar, Perkins & Will and TYLin.
Wood Group will be a nice addition to the portfolio, especially at the bargain basement prices they have suggested.
Sidara said that Wood would continue operating as a standalone, client-facing brand, to ensure business continuity whilst creating growth opportunities for the combined group. This will be of no consolation to Wood Group’s long term shareholders.