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UK engineering firm John Wood Group has offered two businesses for $165mn because it seeks to steer traders of its future as a standalone firm, following two collapsed takeover bids in simply over a 12 months.
Wood, primarily based in Aberdeen in north-east Scotland, stated it was promoting its stakes in EthosEnergy, a three way partnership centered on generators and different rotating tools, and CEC Controls, an industrial and course of management programs enterprise, as a part of a plan to unload non-core divisions.
The transfer comes as Wood mounts a turnaround effort and has confronted strain to place itself up on the market, or transfer its itemizing from London to New York. It additionally follows the latest collapse of a takeover method from Dubai’s Sidara.
Wood expects web money proceeds of about $125mn from the 2 disposals, that are anticipated to finish this 12 months. As a part of the settlement, Wood stated it will concern a mortgage to EthosEnergy that might generate an additional $42mn plus curiosity 5 years after the deal’s completion.
Wood chief technique officer Jennifer Richmond stated the transactions had been “further evidence of progress of our strategy” and that the corporate would proceed to assessment its portfolios in step with plans to simplify its operations.
Wood is at the moment present process a three-year turnaround, and in August reported an working lack of $899mn for the six months to the top of June, down from a $23mn revenue in the identical interval the earlier 12 months.
The firm, which has struggled to chop borrowing ranges since taking up Amec Foster Wheeler in 2017, stated the loss included an impairment cost of $815mn, in addition to different prices associated to its reorganisation.
Meanwhile, its shares tumbled nearly 40 per cent when Sidara stated it was strolling away from its plan to purchase the corporate in August. Sidara, also called Dar Al-Handasah, opted to not go forward with a fourth and “final” takeover bid valuing Wood at 230p per share.
Wood’s shares have been languishing close to 130p since Sidara deserted its bid, citing “geopolitical risks and financial market uncertainty” that had despatched world shares crashing in early August. Its shares had been broadly flat in morning buying and selling on Wednesday.
Sidara’s choice got here after non-public fairness agency Apollo Global deserted a 240p-a-share provide in May 2023 that valued Wood at about £2.2bn, together with debt.
The failure of these bids and Wood’s weak share value efficiency have piled strain on chief govt Ken Gilmartin to hurry up plans to ship progress. This month Gilmartin instructed the Financial Times that the corporate was assured of profitable again investor confidence by delivering on a pledge to chop debt and generate “significant” free money move from 2025.
His feedback got here after activist shareholder Sparta Capital Management this 12 months referred to as for the corporate to “actively seek alternative” options to its UK itemizing, which included switching to New York. Gilmartin stated final week that might not be a “cure” for Wood’s issues.