Wood Group shares jump 13% on Sidara’s potential 35p/share acquisition offer
Investing.com -- Wood Group’s (LON:WG) shares surged over 13% on Monday following the announcement of a potential acquisition proposal from Sidara, a private global engineering and consulting firm.
The proposal includes a cash offer of 35 pence per share for the entire issued share capital of Wood, along with a $450 million capital injection aimed at strengthening the company’s financial position.
The Wood board has signaled it would likely recommend the offer, pending the satisfaction of several preconditions.
These conditions include the extension and modification of Wood’s existing debt facilities, the publication of the company’s audited financial accounts, and the successful completion of Sidara’s due diligence.
The offer is also contingent on the unanimous approval of Wood’s directors and the final approval of Sidara’s board.
If the deal proceeds, it would create a leading global engineering consulting company with enhanced scale and capability in energy and materials, sectors where both companies have strong market positions.
Sidara has made significant progress in its due diligence, including reviewing points raised in an independent audit of Wood, and is committed to ensuring all regulatory conditions are met.
The proposed capital injection would be provided in two tranches: $250 million upon shareholder approval, and an additional $200 million if the offer is finalized.
This funding is designed to help Wood reduce debt and diversify its financing sources, addressing its ongoing capital structure issues.
Jefferies’ data suggests the potential deal values Wood at approximately $1.45 billion, based on its market cap of $316 million, net debt of $690 million, and the $450 million capital injection.
If leases are included, the enterprise value rises to $1.84 billion. Jefferies’ 2025 EBITDA estimate of $432 million implies an EV/EBITDA ratio of 3.4x, or 4.2x including leases, which is significantly lower than valuations seen in 2024, estimated at around 6x EV/EBITDA.
The Wood board has continued to explore various refinancing options but believes the Sidara proposal offers the best path forward for its shareholders, creditors, and other stakeholders.
These efforts are crucial as Wood works to address its liquidity challenges and secure a more sustainable long-term capital structure.
The offer remains subject to several conditions, including shareholder approval, regulatory reviews, and final agreement on the full terms. Wood and Sidara are continuing discussions with the company’s lenders and noteholders to finalize the necessary debt modifications.
Further announcements are expected as the deal progresses. This follows an earlier update from Wood, which had warned it would not meet its FY24 financial reporting deadline, triggering the potential suspension of shares.
