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(Alliance News) - John Wood Group PLC's decision to engage with bidder Dar Al-Handasah Consultants Shair & Partners Holdings Ltd, known as Sidara, prompted a mixed reaction from analysts on Thursday.
"However, having now weighed all relevant factors including, in particular, feedback received from Wood shareholders, the board has decided to engage with Sidara to determine if a firm offer can be made on the same financial terms as the final proposal," the company said in a statement on Wednesday.
The Aberdeen, Scotland-based consulting and engineering firm was commenting after receiving a fourth possible takeover proposal from Sidara last week worth 230 pence per share.
Shares in John Wood jumped 9.7% to 204.10p in London on Thursday. The stock is up 47% over the past 12 months.
Sidara has steadily increased its bid proposal after making an initial approach worth 205p per share which John Wood disclosed in early May.
John Wood on Thursday said it now will grant Sidara access to due diligence materials.
The deadline by which Sidara has to decide whether to make a formal takeover offer has been extended to July 3.
Sidara's fourth proposal still sits below a 240p per share bid made for John Wood by Apollo Management Holdings LP in 2023.
That was rejected at the time.
Peel Hunt analyst Alexander Paterson was "surprised at this change, given the board had stated that a 237p all-cash proposal undervalued the group in 2023, before engaging with an offer of 240p."
"There is no indication from the board that it would recommend an offer, and we are surprised that shareholders would want to consider a bid at this level, given that the turnaround is only approaching the halfway point and a new [chief financial officer] has only recently been appointed to address the challenges with [free cash flow]."
But analysts Jefferies took an opposing view.
"We are not surprised by Wood's board decision," the broker commented.
Jefferies sees an earnings multiple of 6x as an "emotional valuation hurdle" noting the most recent proposal of 230p per share was "so close" to this level.
"We expect the stock now to close some of its trading discount to the proposal," Jefferies added.
By Jeremy Cutler, Alliance News reporter
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