Dubai-based engineer Dar Al-Handasah, known as Sidara, has ended takeover talks with London-listed John Wood Group, citing “rising geopolitical risks” and “financial market uncertainty”
The Emerati firm said on Monday that it “did not intend to make a firm offer” for FTSE 250 constituent Wood, after months of speculation and preliminary bids.
Following the update to markets this morning, shares in John Wood nosedived on the news of Sidara’s withdrawal. The stock fell nearly 40 per cent in early deals to 120p.
Sidara had made four separate bids for the Aberdonian engineering group, the last of which was tabled in late May and valued the firm at 230p per share – a 52 per cent premium on Wood’s closing share price on April 29, when Sidara’s first bid became public.
Wood had rejected all but Sidara’s final bid out of hand, but started engaging with Sidara top brass in early June to see if an agreement could be reached after receiving the Dubai firm’s 230p per share bid.
But Sidara has now pulled out, meaning it cannot make another bid for Wood, which specialises in making floating off-shore oil and gas terminals and refining products, for another six months.
The move will be met with dismay by several activist investors, including Sparta Capital, which have taken up sizeable stakes in Wood and been angling the engineering board either to line up a suitor or consider a New York listing.
Sparta had previously bemoaned Wood’s languid share price, which, before Sidara’s interest became public in April, had fallen 64 per cent since the start of 2021, it was suffering from the “curse of the UK mid-caps”.
The activist investor, founded by former Elliott heavyweight Frank Tuil, had written to Wood’s board in April requesting the firm “undertake a strategic review and actively seek alternative solutions”.
But the Scottish engineer is likely to try and stay the course on its root and branch turnaround plan, which the firm’s bosses cooked up in the wake of a previous unsolicited takeover bid from private equity giant Apollo Global Management.
In a statement to markets, John Wood said: “The board remains confident in Wood’s strategic direction and fundamental prospects. As set out in the HY24 trading update on 11 July, the growth strategy continues to deliver…
“The Board is grateful for the substantial engagement of its shareholders and the support of its clients and employees throughout this process.
“The management team looks forward to continuing to deliver against the strategy set out in November 2022.”