Wood opens books to Apollo as takeover looms
Ken Gilmartin: ‘we have underperformed’
Energy services company Wood Group has edged closer to being acquired after agreeing to talks on a “firm offer” from US private equity group Apollo Global Management.
Aberdeen-based Wood has rejected four proposals from Apollo but earlier this month said it would engage with shareholders on a fifth approach at 240p a share and today said it has granted Apollo access to documents to conduct due diligence.
The deadline for a firm bid has been extended once again, from this Wednesday to 17 May.
Shares in the company closed 14.25p (6.7%) higher at 226p, valuing the company at £1.5bn, still below the proposed offer price, but a stronger indication that investors believe a deal is more likely.
The final proposal, received on 4 April, is subject to a number of pre-conditions, including satisfactory completion of due diligence and to a number of reservations, under which Apollo can make an offer on better or less favourable terms, as further described in Apollo’s announcement.
Wood’s board said it “remains confident in Wood’s strategic direction and long-term prospects, following a transformative year in 2022, including new executive leadership and a new strategy.
“However, having now weighed all relevant factors, particularly feedback received from Wood shareholders, the Board has decided to engage with Apollo to see if a firm offer can be made on the same financial terms as the Final Proposal. Accordingly, the board will grant Apollo access to due diligence materials.”
This latest proposed offer values the FTSE 250 firm at about £1.7 bn and represents a 59% premium to the closing share price of 151p on 21 February, the last business day prior to Wood first confirming Apollo’s approaches.
It is a 20% premium to the initial 200p-per-share it presented to Wood’s board in January.
Ken Gilmartin, who took over as Wood’s chief executive in July last year, last month admitted the company had failed to deliver for shareholders after announcing a pre-tax operating loss of $568 million.
Apollo has stated to the board that it values the skills and capabilities of Wood’s employees and believes the company is well positioned in its markets and at the forefront of the energy transition and industrial decarbonisation.