Predictions25 Jun 2025 12:09
Arguments for the Takeover Being Completed:
* Wood Board's Recommendation: The Wood Group board has indicated they would be "minded to recommend" the offer if a firm bid is made on the proposed terms. This suggests a willingness on Wood's side to engage and find a resolution.
* Continued Engagement and Extensions: The repeated extensions of the deadline for Sidara to make a firm offer show that both parties are actively working towards a deal. If either side was completely against it, the discussions would likely have been abandoned.
* Sidara's Persistence: This isn't Sidara's first attempt to acquire Wood Group. While a previous, higher bid fell through, their return with a new proposal (albeit lower) indicates a strong strategic interest in Wood's assets and market position. Sidara sees Wood as a valuable entry ticket to the European market and a way to enhance its scale, capability, and diversification.
* Wood's Financial Situation: Wood Group has faced financial challenges, including delays in publishing its audited accounts and the need for debt refinancing. The proposed capital injection of $450 million from Sidara is a significant factor that could help Wood address these issues. The board believes this offer represents the "better option for Wood's shareholders, creditors and other stakeholders."
* Strategic Fit: Both companies believe that a combination would create a leading global engineering consulting company with enhanced scale and diversification, particularly in energy and materials.
Arguments Against the Takeover Being Completed (or for it facing further hurdles):
* Previous Failed Bid: Sidara previously walked away from a higher bid for Wood Group in 2024, citing "rising geopolitical risks and financial market uncertainty." While circumstances may have changed. History could repeat itself . This is creating some skepticism
* Uncertainty of Conditions: The takeover is still subject to several pre-conditions, particularly Wood reaching refinancing agreements with its lenders and noteholders, and the publication of its audited 2024 accounts. The delay in publishing these accounts has already led to the suspension of Wood's shares, highlighting the complexity of these financial hurdles.
* Shareholder Sentiment (Potential for Opposition): While the board is minded to recommend the offer, the 35p per share offer is significantly lower than previous bids (e.g., 230p last year). Shareholders might feel the company is being undervalued, especially if the audited accounts reveal a more positive financial picture than currently perceived.
* Due Diligence Findings: While Sidara has made progress on due diligence, any further negative findings during this process could lead them to revise their offer or withdraw.
As a substantial holder, I remain relaxed and sleep well.
Good luck to everyone in your strategy.
Mark
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