Scotland looks like losing another listed company to foreign control amid an ongoing governance crisis, writes TERRY MURDEN
Whichever way you look at it, there is no way of putting a gloss on problems that have been mounting for Wood Group in recent years. A one-time star of Scotland’s listed companies is rapidly coming unstuck, and the board isn’t pulling any punches in admitting that its troubles run deep.
Investors who have stayed with the Aberdeen-based energy services company, once led by Sir Ian Wood, must have winced at the board’s reaction on Monday to Deloitte’s draft review into its corporate governance.
Acknowledging that its auditors were fed “unreliable information” did nothing for its already bombed out share price, which plummeted to a miserly 28p, valuing the group at just £194m.
Wood’s change of fortune harks back to the 2017 acquisition of Amec Foster Wheeler which brought with it a lot of problems that the company is still addressing.
A strong pipeline of orders and lots of promises from the board was enough to keep investors interested and in 2023, Apollo Global Management made five approaches to acquire the company, culminating in a proposed all-cash deal at 240p per share, valuing it at £1.7bn. It eventually walked away having suffered enough rejections, and in the light of recent events must now be thinking it dodged a bullet.
Wood’s board responded to Apollo’s decision by saying it remained “well placed to deliver substantial value for shareholders”, which proved to be just another overstatement.
There followed more approaches, this time from Dubai-based consultancy Sidara, which must also be expressing relief that it was knocked back with a final offer just shy of Apollo’s.
However, Sidara is still at the table, conducting due diligence, and has been given until 17 April to decide whether to lodge a firm offer.
Sidara’s continued interest must mean it is focused on the underlying value in what is, after all, a big global business with a long-established record that has clearly lost its way.
Its latest trading update in February made grim reading, with a sharp downturn in performance in the fourth quarter, prompting a need for more disposals and the cancellation of executive and employee bonuses.
The flight of investors has seen its value plummet and a takeover was encouraged last year by, among others, Sparta Capital Management, one of its top ten shareholders. If Sidara does follow through with a firm offer it will be considerably lower than it had expected to pay just last August. Wholesale changes in the boardroom will surely be a condition of any deal.
Terry Murden was Editor and Business Editor at The Sunday Times Scotland, Business Editor at The Scotsman, and Business and City Editor at Scotland on Sunday. He is now Editor of Daily Business.
There are too many things out of place here, Management provided YE update stating we have addressed issues and in essence the Auditor’s review was supposed to be representative of the past and not how it is today. Nopes, turns out the rot is deeper, this is after due-diligence done by Apollo and Sidara. These businesses have always being opaque, multi-million dollar projects with hundreds of companies and throusands people to deal; funding main projects with payments from the next one, trying to keep the biggies happy while delaying the subcontractors – how the shareholders thought a negative cashflow business is worth more than £1..7 billion we will never know.
Suing the board for misinformation to shareholders..should be considered