PSN bosses in line for £150m after Wood takeover

Wood Group yesterday made a surprise $955 million (£607m) swoop on Aberdeen peer Production Services Network (PSN) in a move that will create an energy services giant with more than 36,000 staff.

• Bob Keiller: "I'm only 46 so I'm not ready to go to grass yet"

The cash and equity deal, backed by Lloyds Banking Group, will see PSN chief executive Bob Keiller and his management team pocket about 150m.

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It will bring together PSN's 8,000 staff with Wood Group's 28,500 worldwide and will boost Wood's turnover from $4.9 billion in 2009 to more than $6bn.

In one of the biggest indigenous takeovers of recent years, PSN's directors will receive 70 per cent of their payout in cash, with the remainder in Wood Group shares.

Sir Tom Hunter's West Coast Capital also held a 7 per cent stake in PSN prior to the deal.

Keiller - who is thought to have held about 10 per cent of the company before the deal - will become chief executive of the combined Wood Group PSN production services division.

Les Thomas, head of the current Wood Group Production Facilities unit, will become Keiller's deputy. Thomas will continue to sit on the group's main board and will be joined by Keiller, who has previously talked about a possible stock market flotation of PSN.

Allister Langlands, chief executive of Wood Group, played down concerns over job losses as a result of the takeover.

"This is not about making job cuts or cost reductions," he said. "This is a vibrant industry and this is about the opportunities ahead of us. There will be a small number of re-deployments within the combined business and the broader Wood Group so we don't envisage any jobs cuts."

Langlands said there was a good geographic fit between the two companies, with PSN filling in gaps in Wood's global network. Analysts highlighted PSN's strengths in the Caspian Sea and Asia-Pacific region.

Wood is paying $547m in cash and $80m in shares, as well as taking on $328m of debt from PSN. Wood is borrowing $875m of bank debt from Lloyds to fund the deal.

Langlands dismissed comments from analysts suggesting Wood would need to issue a cash-call to the markets in the New Year to help fund the deal.

"We are very comfortable with our debt level and we see that falling over the next two years because both businesses generate large amounts of cash," he said.

"We do not envisage any equity placing being required."

PSN was part of Halliburton's KBR engineering division until 2006, when Keiller led a $280m management buy-out.He declined to comment on the exact figure he would receive as part of the deal.

He said: "It will compensate me for the risk taken on a personal level all those years ago when I put myself out on a limb and put my heart and soul into making the business.

"I'm only 46 so I'm not ready to go to grass yet."

The takeover is the latest in a series of deals for Wood Group, which has also won a string of major contracts in recent weeks, including a 560m win in Israel and a 500m deal in Oman.

Alec Carstairs, oil and gas transactions senior partner for Ernst & Young, said: "It is a landmark day, not only for Aberdeen, but for the entire UK oil services industry."x