Wood poised to join Footsie as shares hit record high

WOOD Group last night looked on track to join the FTSE 100 index this month as record crude oil prices and consolidation in the oil services sector pushed its shares to fresh highs.

Aberdeen-based Wood rose 2.8 per cent to a record 450.25p on renewed consolidation hopes, after Reading-based rival Expro International said its board was recommending a 1,435p-a-share bid.

The offer, which values Expro at more than 1.6 billion, came from Umbrellastream, a company controlled by private equity firm Candover and investment bank Goldman Sachs.

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Royal Bank of Scotland is one of five banks involved in a loan of almost 1bn to fund the deal.

It is the latest in a wave of consolidation sweeping the sector. In December, Aberdeen-based oil-rig company Abbot agreed to a takeover offer from US private equity firm First Reserve, which valued it at 906 million.

Shares in the oil services companies Hunting and Lamprell also rose yesterday as analysts predicted further consolidation bids.

Wood Group chairman Sir Ian Wood, whose father founded the company, has previously played down the need to take part in industry consolidation.

"Consolidation generally only takes place in a market when its going the other way," he told The Scotsman in March. "Most of the major players in oil services in the UK are growing extremely well and I'm not quite sure why people think there's got to be consolidation."

Now the company, which employs more than 25,000 staff, is the leading contender to join the blue-chip FTSE 100 index of Britain's largest listed companies later this month.

In March, Wood was placed on the six-member Footsie reserve list, which is created to maintain the index at 100 companies should the number be reduced as a result of corporate actions between quarterly reviews. One of the companies will be promoted this month after shares in the Edinburgh-based brewer Scottish & Newcastle are delisted following its takeover by Carlsberg and Heineken.

Last night, Wood's market capitalisation stood at 2.38bn, around 70m more than support services company Bunzl, the next most valuable reserve list member.

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Asked at its 2007 results whether Wood was hoping to join the blue-chip index, Sir Ian said he was not losing sleep over the prospect. Besides prestige, joining the FTSE 100 traditionally gives shares a boost, with funds dedicated to tracking the index obliged to acquire a stake.

Wood recently revealed that earnings before interest, tax, depreciation and amortisation (Ebitda) had risen 48 per cent in 2007 to $318.4m (160.8m).