Sidara’s Bid to Acquire Wood Group Marks a Strategic Shift
In a notable development for the UK oil services industry, Sidara has presented a non-binding proposal to acquire Wood Group for £242 million, following a previous attempt to purchase the company that was abandoned less than a year ago. The offer signals a renewed interest amid ongoing challenges for Wood Group.
The Proposal Details
Sidara, based in the United Arab Emirates, has suggested a purchase price of 35p per share, representing a 40% premium over Wood’s closing stock price of 25p from the previous week. In addition to the acquisition, Sidara has indicated that it may inject $450 million into Wood Group to bolster its operations. This offer, however, is contingent on Wood Group’s ability to publish its audited accounts for 2024, which has recently been delayed.
Sidara’s History with Wood Group
This acquisition proposal is significantly lower than Sidara’s previous £1.5 billion bid made last year, which was withdrawn due to “geopolitical risks and financial market uncertainty.” The current offer reflects Wood’s deteriorating financial situation, characterized by high debt levels and governance issues that have caused investor concern.
Challenges Facing Wood Group
Wood Group’s share price has plummeted in recent months as the firm grapples with substantial debt, currently estimated at about $1.1 billion. This debt requires refinancing by October. Compounding its troubles, the company announced last month that it would need to restate its financial results for the past three years due to errors, and its 2024 financial statements will be released later than expected. Consequently, shares are likely to be suspended from trading after April.
Additionally, an independent review of Wood’s projects division revealed serious “cultural failings” within the company, including instances of information being withheld from auditors.
Market Reaction and Future Outlook
Despite these challenges, shares of Wood Group experienced a more than 14% increase in early trading on the day of the announcement of Sidara’s proposal. The potential merger is seen as a strategy to create a leading global engineering consulting firm, with Wood Group continuing to operate as a distinct brand within the larger entity.
Regulatory Timeline
According to UK takeover regulations, Sidara has until April 17 to formalize its offer or withdraw its interest in the acquisition. As the situation develops, shareholders and market analysts will be watching closely for Wood Group’s response and the implications of any future agreement.
For more information, visit the Financial Times.