Wood Group shares plummeted on Monday after the energy services and engineering firm announced damaging findings from a review of its finances. The findings cast doubt over whether Sidara’s takeover deal will go ahead.
Wood Group shares were 30% lower at the time of writing.
Deloitte’s review of the company’s financials ‘identified material weaknesses and failures in the Group’s financial culture within the Projects business unit and engagement between Group Finance and Projects’.
As a result, Wood Group said the P&L and balance for the past three years would be adjusted, and EBITDA would also be revised.
“The situation continues to deteriorate at energy services business Wood Group which is damaging its credibility not just with investors but crucially potential customers too and its current suitor, Sidara,” said Russ Mould, investment director at AJ Bell.
“The deadline for Sidara to formalise a takeover deal has been pushed to 17 April but whether the latest revelations cause a rethink for the Dubai-based group or complications in the timetable remains to be seen.”
“While the issues revealed in a draft review of the business mainly relate to historical performance at its Projects business unit and do not relate to cash flow, they raise questions of culture given the failure to maintain robust accounting standards. The shares now face a suspension while historic accounts are restated.”
Investors who bought into the stock in the hope of a takeover deal now face a nervy wait for any update on the talks between Wood Group and Sidara. Dubai-based Sidara may be inclined to hold off making a move now to see what the fallout for Wood Group will be – and ultimately if they’re able to secure the group at a lower price.
Wood Group’s shares will be suspended from 30th April if the company does not publish FY24 accounts by 30th April. This is expected to be the case.