Wood Group Spurns Sidara's £1.4B Bid, Shares Surge 26%

Key Takeaway

• Wood Group rejects Sidara's £1.4 billion takeover offer, considering it undervalues the company despite a 24% premium.
• Wood's shares jump 26% after rejecting the bid, amidst investor pressure for strategic review to enhance value.
• Sidara, with a diverse portfolio in engineering and consultancy, shows strategic interest in Wood amid its stock decline.

Takeover Bid Rejected

John Wood Group Plc, a prominent player in the oil services sector, has declined a £1.4 billion ($1.8 billion) acquisition proposal from Sidara, a family-owned engineering firm. The offer, disclosed in a regulatory filing, was for 205 pence per share in cash, marking a 24% premium over Wood's closing price the day before the announcement. Despite this, Wood's board, after consultation with financial advisers JPMorgan Chase & Co. and Morgan Stanley, unanimously determined that the bid significantly undervalued the company and its potential for future growth. This decision comes amidst a backdrop of previous interest from Apollo Global Management Inc., which ceased its pursuit after Wood granted access to due diligence materials following a final offer of £1.66 billion, or 240 pence per share.

Market Reaction and Strategic Review

Following the rejection of Sidara's offer, Wood's shares experienced a notable surge, climbing as much as 26% in a single day, marking the most significant intraday gain since February 2023. This movement reflects the market's reaction to takeover speculations and concerns over the undervaluation of UK-listed companies. Additionally, Wood has been under pressure to address its market valuation, especially after Sparta Capital Management Ltd., an investor in Wood, advocated for a strategic review of the company to explore potential sales or other alternatives to enhance shareholder value.

Sidara's Position and Portfolio

Sidara, previously known as Dar Group, has expressed its interest in Wood amid the latter's declining stock price, which had dropped about 25% over the past 12 months before the offer. With a global presence through more than 300 offices in 60 countries and revenues of $2.8 billion last year, Sidara's portfolio includes several notable firms such as Perkins&Will, Currie & Brown, and Penspen. The company recently divested approximately 19% of its stake in Australian infrastructure firm Worley Ltd., indicating its active management and strategic positioning within the engineering and consultancy sectors.