Letter to chair
Activist targets Wood over flagging share price
Energy services company Wood is under pressure from an activist investor to bolster its flagging share price.
Former Elliot Management activist fund manager Franck Tuil has issued a copy of a letter sent to Wood chair Roy Franklin warning that the company’s value makes it vulnerable to a bid.
It is the first public campaign for his $600 million multi-strategy fund, Sparta Capital, which launched last year to invest in a broad range of public and private securities across equity and credit markets.
Mr Tuil said in his letter, posted today, it has had six private meetings with the Aberdeen-based company and that Wood has sufficient cash for a share buyback that could help boost the value of the company.
He writes: “Thanks to the disposal of the Built Environment division which completed in September 2022, Wood’s balance sheet is robust and fit for purpose and, most importantly, Wood generates reliable and predictable operating cash to invest in its future and reward its shareholders.
“Out of respect for your wish to focus on the much-anticipated capital markets day on the 29 November, we have refrained from making our views public to date.
“However, we believe it is now important to share our thoughts and concerns with our fellow shareholders and all stakeholders who, like us, have an interest in seeing Wood recognised for the great business it is and the strong prospects it enjoys.
“The imperative to do so is now all the greater in the context of the very significantly negative share price reaction to your CMD, which we believe is evidence of disappointment at the lack of shareholder returns offered, and a misinterpretation of your messaging around free cashflow generation. The former a missed opportunity, the latter the consequence of poor communication.”
He says Wood Group is cash generative and substantially undervalued both intrinsically and versus its global peers.
“Whether analysed in relative or absolute terms, it is our view that the shares offer well over 100% upside in the near term.”
At mid-day shares in Wood Group were trading 4.30p (3.44%) higher at 129.2p but have fallen this year by about a third, having hit two-year lows at one point.
Wood did not issue a statement in response to publication of the letter.