Meed | Sidara pulls out of Wood takeover

Sidara pulls out of Wood takeover

5 August 2024

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Dubai’s Sidara has pulled out of plans to buy the UK’s John Wood Group, sparking a 40% drop in the Aberdeen-based engineering company.

In a statement, Sidara cited rising geopolitical risks and uncertainty in the financial market as its reasons for walking away from the deal.

Wood had previously told Sidara that it had until 9 August 2024 to make a firm offer or walk away for at least six months.

Sidara approached Wood Group multiple times in May and June, taking the offer from 205 pence ($2.62) to 230 pence ($2.94), which it said would be its final offer.

The most recent offer valued Wood at over £1.58bn ($2bn).

Wood rejected the initial offers due to concerns about valuation and future prospects.

Wood’s board of directors initially set 5 June as the deadline for Sidara to make a full and final acquisition offer, but it extended the deadline several times.

In the past 18 months, Wood also rejected five offers from the US-based private equity firm Apollo.

The Scotland-based company has worked on several high-profile projects in the Middle East and North Africa (Mena) region over recent years, including major projects in Algeria, Egypt and the UAE.

Wood financial results

In its financial results for the first quarter of 2024, Wood said its revenue was $1.356bn, down by 6% compared to $1.463bn in the first quarter of 2023. “Growth in operations offset lower revenue in projects, mainly reflecting lower pass-through activity and lower EPC [engineering, procurement and construction] revenue in line with our strategic shift,” the company said.

Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) in the first quarter was up 4% “with margin expansion across all of our business units offsetting lower revenue”.

“This margin performance was helped by improved pricing and our strategic focus on building higher-quality business, with our move away from EPC work,” Wood stated.

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Wil Crisp