Sidara Proposes £242 Million Acquisition of Wood Group Amid Financial Turmoil
In a noteworthy development within the UK oil services sector, Sidara has made a nonbinding conditional proposal to acquire Wood Group for £242 million. This offer comes less than a year after Sidara abandoned a previous £1.5 billion bid due to concerns over geopolitical risks and market uncertainties.
Key Details of the Proposal
Sidara, a company based in the United Arab Emirates and London, has offered to purchase Wood Group at 35 pence per share. This represents a 40% premium compared to Wood’s closing price of 25 pence the previous week. Additionally, the proposal includes a potential infusion of $450 million into Wood, addressing its significant financial challenges.
Financial Context and Governance Issues
Wood Group is currently grappling with substantial outstanding debt, estimated at around $1.1 billion, much of which requires refinancing by October. The company has faced severe stock price declines, attributed to rising debt levels and governance concerns. Recent revelations indicated that Wood would need to restate its financial results for the past three years and delay its 2024 accounts, possibly leading to a suspension of its shares by late April.
Prospects of a Firm Offer
According to Wood Group’s board, should Sidara decide to proceed with a firm offer, it is likely to gain their recommendation for shareholder approval. The board expressed optimism about combining operations, suggesting that such a partnership would result in the creation of a leading global engineering consulting entity while maintaining Wood’s distinct brand identity.
Stock Market Reaction and Future Steps
The news of Sidara’s proposal has positively influenced Wood’s stock, which experienced a surge exceeding 14% in early trading. Under UK takeover regulations, Sidara will need to submit a firm offer by April 17 or reconcile its interest with Wood Group.
Looking Ahead
As the deadline approaches, the next steps will hinge on the publication of Wood’s audited accounts for 2024. The ongoing negotiations highlight the complexities and opportunities present in the UK oil services market, with stakeholders keenly monitoring the situation.
For more information about this unfolding scenario, stay updated on financial news platforms and industry reports.