Dubia-based Sidara has today proposed a £242million deal for Wood Group, less than a year after walking away from a £1.5billion deal.
The proposal - which the Wood board view as acceptable - would also see £340million injected into the Aberdeen-headquartered business.
Should the deal progress, Sidara will acquire the energy services firm for 35p per share, 85% less than the 230p per share it tabled last year.
Wood’s share price ended last week at around 25p after falling just over 80% in the past six months. However, its share price jumped 17% to 29p when markets opened this morning.
Sidara's “holistic non-binding conditional proposal” would require Wood to seek an extension of, and “certain other amendments to”, its existing committed debt facilities.
'Better option'
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.
The two companies were in talks last year about a possible offer priced at 230p per share, before Sidara walked away, citing "rising geopolitical risks and financial market uncertainty at this time".
Enhanced scale
Wood said the proposed combination of Wood and Sidara would create a leading global engineering consulting company with "enhanced scale, capability and diversification".
It said that by bringing together Wood’s deep domain experience with Sidara’s specialist strengths in energy and materials, the combined business would be well-positioned to lead and grow in these attractive global markets.
“Sidara has a strong track record of its acquired businesses prospering within the group. Wood would continue to operate as a standalone, client-facing brand, maintaining its identity and trusted client relationships,” said Wood.
“This would ensure business continuity for existing clients while creating growth opportunities for the combined group and strengthening Wood’s commercial position.”
Difficult year
Wood Group’s shares dipped in November after announcing Deloitte had been drafted in to conduct an independent review of its accounts.
In February, bosses said that the review had shown it needed to improve its culture and controls in the light of “identified weaknesses and failures”, while Deloitte’s findings also suggested profits from Wood Group’s projects division may have been overstated in 2023 and prior years.
The same month, the firm's chief financial officer, Arvind Balan, resigned after admitting he incorrectly claimed to be a chartered accountant.