Wood Group, a struggling oil services and engineering company, has started discussions for a potential takeover with a UAE-based firm, Sidara. This comes after Wood’s market value fell below £200 million this month. Last year, Sidara had made a £1.6 billion offer but ended talks in August before making another approach recently, likely due to Wood’s declining share price.
The discussions were still in progress as of Monday morning, though it’s uncertain whether a deal will be reached. Following reports of Sidara’s renewed interest, Wood’s shares surged by as much as 33%, pushing its market cap to over £240 million, a fraction of the previous offer.
This dramatic drop in share price—more than 60% earlier this month—has raised concerns regarding Wood’s management and mounting debt. The UAE firm aims to act quickly to retain key staff at Wood who are reportedly unhappy due to the company’s recent turmoil, which included cuts to employee bonuses.
Wood has acknowledged Sidara’s interest and stated that there is no guarantee of a formal offer being made. According to UK takeover regulations, Sidara has until March 24 to declare a firm bid or withdraw.
At its peak, Wood boasted a market value of over £5 billion, especially after acquiring Amec Foster-Wheeler in 2017 for £2.2 billion. Recently, an independent review revealed significant weaknesses in its financial and governance structures. The company also faces a looming $1.4 billion in debt facilities that mature by October next year, complicating any potential fundraising efforts.
Adding to its challenges, Wood’s CFO, Arvind Balan, recently resigned after discrepancies in his professional qualifications were revealed. The company, which employs about 35,000 people globally, remains one of the few capable of managing extensive projects preferred by major oil companies.
Amid this potential deal with Sidara, Wood has been exploring options to possibly separate its consulting division, which could be valued at over £1 billion, to ease its debt load. However, sources indicate that the board is inclined to pursue a complete sale of the company first, positioning Sidara at the forefront.
Sidara, formerly known as Dar Al-Handasah, has been active in the engineering field since 1956. The private equity firm Apollo, which previously sought to acquire Wood, is not expected to enter the fray again this time, leaving Sidara as the prominent player in these discussions.