Wood group accepts further reduction in Sidara takeover offer

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WOOD GROUP has accepted a second reduction to a takeover offer from UAE-based Sidara which values the British engineering company at £216m (US$291m) – less than 15% of the initial offer made last year.

Wood has been in trouble since February this year when an independent review by Deloitte found the company had misled auditors, which was followed in April by Sidara slashing their outright takeover offer from £1.5bn to £242m. Sidara withdrew the initial offer citing “rising geopolitical risks and financial market uncertainty”.

The Aberdeen-based company, which carries out engineering contracts across the oil and gas, chemicals, renewables, minerals and pharmaceuticals sectors, today wrote to shareholders recommending they accept Sidara’s offer, telling them the company had failed to generate sustainable cash flow since 2017. Instead, Wood added, US$1.5bn had flown out of the company in that time because of “regulatory fines, significant lossmaking contracts, restructuring charges and litigation payments”.

Wood remains under an investigation launched in June by the Financial Conduct Authority for misleading auditors in preparing accounts since 2022. Following the review earlier this year by Deloitte, Wood accepted in March that the company’s “cultural failings” had “led to instances of information being inappropriately withheld” from auditors. Their statement added they had a culture of “inappropriate management pressure…to maintain previously reported positions, including through unsupported dispensations and overoptimism and/or lack of evidence in respect of accounting judgements.”

Since Wood’s financial woes became public the company has been selling off “non-core” parts of its global business to ease debts which currently stand at US$1.6bn, and to “mitigate the impact of negative free cash flow”. Wood has suspended trading on the London Stock Exchange since April after failing to publish accounts for the 2024 financial year on time. Shares in Wood are currently valued at 20p, compared to 134p in October 2024. Sidara’s latest offer will see them buy shares in Wood at 30p each.

So far Wood has generated US$275m this year from selling off parts of the business, exceeding the US$150m-US$200m target the company set itself for the year in February. 

The latest operation to be sold off by Wood is its North American Transmission & Distribution (T&D) business that provides engineering services for substations, transmission, distribution and renewable energy generation across the US and Canada. Wood announced this week that T&D is to be bought by US-based electricity grid engineering company Qualus for US$110m.

T&D is a relatively small part of Wood’s sprawling global business, employing 250 people out of 35,000 across 60 countries.