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Wood Group Stands Firm Against Sidara's $1.8 Billion Undervalued Bid

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Robert Tavares

May 8, 2024 - 11:55 am

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Wood Group Rejects £1.4 Billion Takeover Bid from Sidara as Undervalued

Wood Group, a prominent firm headquartered in Aberdeen, UK, with a long-standing reputation in the engineering sector, has recently dismissed a substantial acquisition proposal. The company, John Wood Group Plc, disclosed that it rebuffed an unsolicited preliminary bid amounting to £1.4 billion, approximately $1.8 billion, from the family-owned engineering conglomerate Sidara.

In an official regulatory announcement following the exposure of takeover interest by Bloomberg News, Wood Group stated the bid from Sidara was an offer of 205 pence per share. However, after thorough consideration alongside its financial advisers, the board declared the bid insufficient, citing the offer drastically undervalued the company along with its future growth prospects.

A Glimpse into the Proposed Deal

This proposal represented a 24% increase over the closing stock price of Wood Group recorded on the prior day. Sidara, which had been known previously as Dar Group, signaled a potential acquisition of Wood Group amidst its declining stock value. Prior to the bid, shares of Wood Group had seen a fall of about 25% throughout the past year. Now, in the wake of this proposal, Sidara has a deadline until June 5 to proclaim whether it will proceed with a firm offer for takeover or rescind the bid.

Unprecedented Market Response

Following the announcement, shares of Wood Group experienced a surge of as much as 26% on Wednesday, signifying the largest intraday climb since February 2023.

In the Advisors' Circle

To navigate through this proposition, Wood Group has JPMorgan Chase & Co. and Morgan Stanley on board, acting as joint financial advisers and corporate brokers.

A Reflection on Past Takeover Interactions

The approach by Sidara comes roughly one year after Apollo Global Management Inc. retreated from a similar acquisition proposal. Wood Group had turned down several overtures from Apollo before allowing the buyout titan to inspect due diligence materials following what was then a “final offer” in April, tuning £1.66 billion or 240 pence per share.

Investors Stirring Strategic Actions

In the previous month, Wood Group investor Sparta Capital Management Ltd. expressed, via a letter, a strong assertion that the company undertake a strategic revision and actively scout for alternate resolutions, including contemplation of a possible sale.

An Insight into Sidara’s Operations

Sidara, originally founded in Beirut in 1956 as Dar Al-Handasah, has emerged as a global powerhouse in design and engineering with a vast network comprising over 300 offices spread across 60 countries. The firm's official website boasts last year's revenues reaching a staggering $2.8 billion.

Diverse Portfolio of Sidara’s Business Ventures

The entity's business ventures encompass a myriad of industry specialists, such as the renowned architectural practice Perkins&Will, esteemed project managers Currie & Brown, energy infrastructure authorities Penspen, structural engineering services expert Maffeis, and the prominent building consultancy Introba.

Sidara’s Recent Strategic Movements

It was only a month ago that Sidara decided to offload approximately a 19% stake in the Australian infrastructure construction giant, Worley Ltd., conducting the transaction through a block trade.

This news article was crafted with insights from Laura Hurst and is published under the ©2024 Bloomberg L.P.

Web Reference for Detailed Information

For a visual depiction of Wood Group's headquarters and further details on this developing story, refer to the Bloomberg image and original article found at:

Wood Group has headquarters in Aberdeen, UK. Photographer: Emily Macinnes/Bloomberg

For an expansive range of services and detailed company portfolio information on Sidara, please visit their official website, which provides extensive corporate insights and the latest news updates.

The Larger Implications of the Rejection

The decision by Wood Group to turn away the lucrative bid sheds light on an increasingly cautious approach by companies in the face of buyouts. Mergers and acquisitions, while often providing immediate financial uplift, must also align with long-term strategic goals. Wood Group’s rejection underscores its confidence in its intrinsic value and potential for future growth.

Prospects and Challenges in the Global Engineering Sector

The engineering sector globally is facing a seismic shift, with companies striving to adapt to rapid technological advancements, increasing environmental concerns, and the heightened emphasis on sustainable practices. Sidara’s keen interest in Wood Group reflects the ongoing consolidation trend within the industry, as companies seek to fortify their market standing through strategic acquisitions.

Strategic Reviews and Investor Activism

The call to action by Sparta Capital Management Ltd. highlights a rising trend of shareholder activism, where investors are not shying away from urging companies to reassess their strategic direction. This dynamic indicates a more interactive and perhaps robust relationship between corporate leadership and its shareholders.

What Lies Ahead

With the deadline for Sidara to make an affirmative decision on the acquisition of Wood Group approaching, the industry eyes are set on potential escalations of the offer or any peripheral interest that may arise. Furthermore, the possibility of other bidders entering the fray or Wood Group initiating a strategic review could lead to a complex series of developments within the international engineering firmament.

Conclusion

The unfoldings around Wood Group and Sidara represent a classic case of an acquisition tug-of-war, reflecting the nuanced calculations of value, future projections, and shareholder interests that define the modern-day corporate ecosystem. As the deadline for Sidara’s decision looms closer, the industry awaits with bated breath the ultimate outcome of this potential merger and its broader implications for the global engineering landscape.

Bloomberg L.P., by way of their thorough coverage on the matter, serves as an essential source for financial news globally, delivering in-depth analysis and essential updates that shape the narratives of global economics and corporate strategy.

For those interested in investing, stock market movements, or implications of corporate takeovers, keeping an eye on this story through Bloomberg's reporting could provide valuable insights.

Please note that the information presented above is current as of the time of reporting. Future developments may arise that alter the situation as detailed here. Continued monitoring of Bloomberg L.P. and other financial news outlets is advised for those seeking the latest in business and finance news.

In summary, the clash between Wood Group's self-valuation and Sidara's acquisition bid serves as a reminder of the intricate dance between evaluating present worth and gauging future success in the corporate world. It is a narrative replete with strategy, negotiation, and the struggle to find common ground in the complex tapestry that is the global business sector.

Click here to view the full Bloomberg article, along with the image showing Wood Group's headquarters.