Member Info for Wiggly

An offer of 140p per share for Wood Group could be difficult to justify based on the company’s underlying value and its earnings potential, even considering its current challenges. Let’s break down the key points:

1. Previous Offers and Valuation:

Sidara’s last formal bid in August 2024 was 230p per share, valuing Wood Group at approximately £1.56 billion.

A drop to 140p per share would reflect a 39% discount from that offer — a steep cut, even accounting for market and operational difficulties.

2. Financial Performance and EBIT Trajectory:

Wood Group reported adjusted EBITDA of around $450–$460 million for 2024 and expects double-digit EBIT and EBITDA growth in 2025. Assuming 10% growth, 2025 EBITDA could approach $495–$506 million.

Using conservative industry EV/EBITDA multiples (3.2x–3.8x), the company’s enterprise value would likely range between $1.57 billion and $1.93 billion. After accounting for net debt of ~$1.26 billion, the implied equity value would be $310 million to $670 million — well above the level a 140p share price would suggest.

3. Operating Cash Flow Challenges:

Wood Group has projected negative free cash flow of $(150)–$(200) million for 2025 due to weaker trading conditions and legacy costs. While this puts pressure on short-term liquidity, the company expects to return to positive free cash flow in 2026.

Given this outlook, a discounted offer could be justified, but a 140p bid might underestimate the company’s recovery potential.

4. Current Market Price:

Wood Group’s share price has been trading around 40p, reflecting market concerns about debt, cash flow, and governance issues.

A 140p offer would still represent a significant premium — around 250% over the current market price — which could attract some shareholder interest.

5. Leverage and Alternatives:

Wood Group retains negotiating leverage through potential strategic options like a rights issue (RI) to address debt and stabilize finances.

If the company can execute its turnaround plan and deliver the expected earnings growth from 2025 onward, the share price could recover to well above 140p, potentially closer to previous offer levels around 230p.

Conclusion:

While 140p could be presented as a short-term premium, it might undervalue Wood Group’s future earnings potential and strategic recovery. If Sidara pushes for this price, it could signal an opportunistic bid based on current financial distress rather than the company’s long-term value. A fairer offer would likely sit higher, closer to the £2 per share range, depending on updated financial performance and cash flow visibility.

Perhaps some pre market BOD meetings in the UK...

What was the timing between last approach and offer being made public?

I assume the ability to do RI is the leverage that WG has.

Post-RI, Sidara would have to pay top $.

I'm sure there is potential for some middle ground (win-win) that will see the final agreed price at a decent level for LTH and bargain for Sidara.

Unlikely considering Sidara made a preliminary approach to the Board of Wood regarding a possible cash offer for the entire issued share capital of Wood.

If sidara low ball, it will risk encouraging other bargain hunters (PE) to bid. I think they need to offer a strong bid to ensure they secure without risk of losing out.

I wonder if they have been accumulating all of the shares since Feb 14th? Would make sense to do so and would allow them to offer higher price now.

Apollo et al could also step in

For a deal to be acceptable to both Wood Group’s shareholders and Sidara, the price likely needs to balance Wood’s current challenges with its long-term potential. Let’s weigh a few factors:

1. Wood Group’s position:

High debt: ~$1.26 billion

Negative cash flow: Up to -$200M for 2024

EBITDA: ~$450–460M for 2024

Restructuring and cost-cutting: Could improve future performance but adds risk

2. Sidara’s perspective:

They’ll want a return on investment, likely targeting a reasonable EBITDA multiple

Sidara may see long-term synergies that justify a premium, but they’ll still expect value

With Wood’s current cash flow issues, Sidara has some leverage

3. Acceptable valuation range:

A 4-4.5x EBITDA multiple often strikes a balance for companies in Wood’s situation — a mix of financial struggles and potential.

4.0x EBITDA: ~$1.8B EV → ~$540M equity value → ~£0.62/share

4.5x EBITDA: ~$2.03B EV → ~$770M equity value → ~£0.89/share

4. Likely acceptable price:

Given Sidara’s previous interest and Wood’s current state, I’d expect both parties to settle around a 4.0–4.5x EBITDA multiple, implying an equity value of £0.62–£0.89 per share.

Sidara’s reported £1.6B offer sits at the higher end of that range, which suggests they might already be offering more than many would expect given Wood’s debt and cash flow problems. That said, if Wood’s shareholders push back, a small premium above £0.70–£0.80 per share could get the deal across the line.

Idiots.

Has to be pitched at a level to secure.

The FT is not the daily mail. They don't post rumours

66p starting bid. Will move to 100p +-

Https://www.ft.com/content/e95b2a80-dd85-4163-bd76-3b316670d981

Let's hope Apollo also keen. Quick move back to 100p+

Just wait for Apollo to step in also

Icecool, can you tell us how much liquid cash they have, to make an assumption that this isn't a liquidity crisis?

Circa 470m

1. Put the group up for sale, targeting H1 2025 closure.

Value £400-600 million (worst case) = 70-90p per share.

2. Execute the strategy and deliver positive cash flow in 2026.

Market cap value back to £1.2 billion+ (180p+).

If the board of directors remains confident in the 2026 plan, they are unlikely to sell.

If the risk is high, major holders and lenders will likely push for option 1. Private equity would be able to restructure the debt and deliver value.

With no material risk associated with the outcome of the review, I think this is an excellent risk-reward ratio at 26p.

It's getting ready to break out.

Captain

Agree, shambolic from the CEO

Nobody will bid until the audit review is over.

That's not true. They can bid and walk away again if it's bad BUT we already know it's not material

Crazy at it sounds but 100p definitely undervalues based in key metrics