Wood Group latest: New bid values historic Scottish firm at £242m, down from over £1.5bn

Wood Group, the Aberdeen-headquartered energy and engineering services heavyweight employing thousands of Scottish workers, appears to be close to agreeing a £240 million-plus takeover deal - a fraction of its value just a year after a previous approach collapsed.

The FTSE 250 group said Sidara - a privately held network of engineering and design companies run from the United Arab Emirates - had put forward a non-binding conditional offer of 35p per share to buy the business. The fresh offer, which would also include a potential $450 million (£342m) cash injection into Wood, would value the Scottish group at some £242m.

It comes just under a year after talks around a previous £1.56 billion takeover approach from Sidara collapsed and two years since US private equity suitor Apollo Management dropped its £1.7bn proposed takeover offer. Wood’s share value has tumbled in recent months, particularly after updates highlighted potential governance failings and the need for the group to restate its accounts.

Wood Group, the Aberdeen-headquartered FTSE-250 energy and engineering services business, employs more than 35,000 people globally and is involved in a wide range of projects.

Bosses at the firm said they would “be minded to recommend” the latest takeover deal from the Dubai-based suitor. Wood said it has continued to assess other potential refinancing options alongside holding talks with Sidara regarding the potential takeover.

In February, Wood confirmed it had restarted takeover talks with its rival, before extending discussions last month.

In its latest stock exchange announcement, the firm said: “The board of Wood believes that the company needs to have a more sustainable capital structure, and this requires substantial new capital in order to diversify Wood's financing sources and reduce its indebtedness over time.

“Work continues on a range of alternative refinancing options. However, having carefully considered the viability of these options together with its financial advisers, the board of Wood currently believes that the possible offer represents the better option for Wood’s shareholders, creditors and other stakeholders.

Wood Group chief executive Ken Gilmartin.

“Accordingly, the board of Wood has indicated to Sidara that, should an offer be made on the terms set out above, it would be minded to recommend the offer to Wood’s shareholders, subject to agreement of the full terms and conditions of the offer.”

Shares were up about 10 per cent in Monday morning trading.

Wood Group operates across 60 countries and has about 35,000 staff in total, carrying out engineering and consulting work on oil rigs and energy installations, among other things. The company employs more than 6,000 people in the UK, including about 4,500 supporting North Sea operations in Scotland.

Any takeover and subsequent stock market delisting of Wood would mark a further shrinkage of Scotland plc. Recent years have witnessed the acquisition of well-established publicly-quoted businesses including aviation services heavyweight Menzies, temporary power specialist Aggreko, microchip developer Wolfson Microelectronics and transport giant Stagecoach.

Wood has increasingly focused on playing a part in major green energy and renewables projects such as offshore wind.

Many businesses that gain new private equity or investment fund owners retain the branding, much of the workforce and existing management teams. To all intents and purposes, it is business as usual, minus much of the public and investor scrutiny that comes from having a stock market listing.

On the flip side, a takeover involving a trade buyer or larger rival almost invariably involves a lot of overlap, resulting in the inevitable “synergies” - the breaking up of operational divisions, job losses and downsizing, rebranding, a switch of head office.

In every deal, there tends to be a certain loss of status - the business can no longer be thought of as truly Scottish, while the country’s standing in the top rankings of UK plc is further diminished. An acquisition by an overseas suitor is likely to result in profits and valuable tax revenues flowing out of the country.

John Wood Group plc, to give it its formal name, is a storied Scottish business of considerable global scale. Founded more than four decades ago from fishing industry roots, the company’s fortunes have tracked the growth of the North Sea sector and with it a push into related energy and specialist engineering markets, both domestically, and increasingly, overseas.

The person most closely associated with Wood is North-east businessman and philanthropist Sir Ian Wood, who is credited as being largely responsible for the transformation of a regional player of modest scale into a multi-billion-dollar revenue multinational. He served as the group's managing director and chief executive from 1967 to 2006, and as chairman until 2012. Sir Ian and his family have an estimated net worth north of £1bn.

Wood’s current chief executive, Irishman Ken Gilmartin, took over the reins from Robin Watson, who announced his intention to retire in April 2022 after ten years on the board.

The bid interest from Sidara comes after a failed private equity attempt to take over the Scots firm in 2023. Apollo made an approach worth £1.68bn, or 240p per share, to buy Wood after a series of previous approaches were rejected, but eventually abandoned plans to make a firm offer.

In February of this year, Wood cancelled employee bonuses and declined to rule out job cuts, after saying it needed to significantly extend a cost reduction plan. It noted that a recent review of the business carried out by consultants at Deloitte had found “material weaknesses and failures” at the firm.

Shares slumped after the group revealed that its cash flow in 2024 was negative by as much as $200m. Negative free cash flow means a company is spending more money than it is generating.

Wood had previously forecast “significant” positive free cash flow for the year. As a result, it is extending a cost-cutting programme which already stripped out some $60m from its outgoings in 2024, to save another $85m this year. Gilmartin described the company’s financial performance as “disappointing”.

Wood Group woes: Shares plunge at Scottish heavyweight employing 6,000 UK and North Sea workers