Aberdeen-based Wood offloads division to Canada's WSP in £1.5bn deal

Aberdeen-headquartered John Wood Group has hailed the marking of a “new chapter” with the sale of its Built Environment Consulting arm in a deal worth about $1.9 billion (£1.5bn).

The consulting and engineering giant said it has agreed to offload the unit to Montreal-based engineering professional services firm WSP Global Inc.

It follows on from Wood saying in January that it had decided to put the Built Environment Consulting business on sale, a move it expected to deliver value for shareholders and strengthen its ability to capitalise on “significant opportunities” including in energy transition and industrial decarbonisation.

The decision came on the back of a review started in November 2021 of the division, which Wood said at the time had 7,000 workers (6,000 in North America and the remainder largely in the UK) and provided consulting and engineering services focused on “environmental risks, increase climate resilience, help to build more sustainable infrastructure and improve mobility”.

The deal is expected to conclude in the second half of 2022, subject to relevant approvals, and Wood said the primary and immediate use of the net cash proceeds from the transaction will be lowering its net debt – which was $1.4bn at the end of 2021 – to strengthen its balance sheet and provide financial flexibility to deliver its strategy.

Wood said the transaction “will significantly reduce the group’s leverage and help us accelerate our strategy to be a leader across energy security and sustainability”, and could bring about the restoration of an ordinary dividend plus inorganic in addition to organic growth.

Wood chief executive Robin Watson – who earlier this year said he was stepping down from the role after taking it on in 2016 – praised the deal agreed with WSP. “This transaction will deliver significant value for our shareholders and marks a new chapter for Wood. It enables us to move onto our next strategic phase with the financial flexibility to accelerate our strategy to capture the growth opportunities ahead across both energy security and sustainability.

'This transaction will deliver significant value for our shareholders and marks a new chapter for Wood,' says departing CEO Robin Watson. Picture: contributed.

“We are focused now on the steps to complete this deal and in further developing our strategy, which we will outline in detail at a capital markets day, when my successor as chief executive is in place”.

Alexandre L’Heureux, president and chief executive officer of WSP, said: “The addition of the Built Environment Consulting business will allow us to expand our earth and environment leadership across our key markets and geographies. We share a common purpose of making the world a better place, and our united forces will only further our expertise to create a more sustainable and resilient world”.

In terms of Wood’s outlook for this year, it said this remains unchanged from that set out in its 2021 full-year results announcement in April. It added that excluding the impact of the sale, it expects both higher revenue in 2022 across its business supported by the growth in its order book, and no improvement in net debt in 2022 compared to 2021.

Shares in Wood closed down by 6.37 per cent at 223.4p.