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British engineer John Wood Group suffered a near 40 per cent fall in its share price on Monday after Dubai’s Sidara said it was walking away from its plan to buy the company.
Sidara, also known as Dar Al-Handasah, said it had decided against making an offer for the London-listed and Aberdeen-based company because of “geopolitical risks and financial market uncertainty”.
The collapse of the takeover sent Wood’s shares tumbling 39 per cent to 120p by late morning in London trading.
Sidara’s decision to abandon its pursuit of Wood came less than a week after the companies had agreed to extend a deadline to conclude talks on a potential deal.
Wood had previously rejected three approaches by its Dubai-based suitor.
It agreed in early June to engage with Sidara after the latter submitted a fourth and “final” offer of 230p, up from an initial 205p. It had rejected previous offers for “significantly” undervaluing the company.
“In light of rising geopolitical risks and financial market uncertainty at this time, Sidara does not intend to make a firm offer for Wood,” the privately held company said, without providing more details.
The proposed takeover is an early casualty in London of the volatility that is hitting markets across the world on concerns that the US could be heading for a recession.
Sidara’s bid was the second potential deal for Wood to collapse in just over a year.
In May 2023, private equity firm Apollo Global decided against going ahead with a 240p-a-share bid that valued Wood at about £2.2bn at the time, including debt.
The Aberdeen-based company said its Dubai counterpart had confirmed on Friday that it had completed a due diligence exercise and then informed its board on Monday morning that it did not intend to make an offer.
Wood’s board, which is in the middle of implementing its own turnaround strategy, said on Monday it had confidence in its “strategic direction” and future prospects.
“As we look ahead, we remain focused on delivering our potential, including generating significant free cash flow next year.”
Wood, which was founded by Scottish billionaire Ian Wood in 1982, has been under pressure from investors, including activist investor Sparta Capital Management, to boost its share price by either selling itself or moving its listing to New York.
In a trading update last month, Wood, led by chief executive Ken Gilmartin, said its simplification programme had already “secured” about $25mn of its total annualised savings target of about $60mn from 2025.
It said it expected to generate a 4 per cent increase in adjusted earnings before interest, taxes, depreciation, and amortisation for the half year ended on June 30, offsetting lower revenue by concentrating on higher-margin projects.