Wood Group suitor Sidara walks away from takeover talks due to growing ‘geopolitical risks’

Engineering firm Sidara has pulled out of a potential takeover by John Wood Group, blaming “growing geopolitical risks and financial market uncertainty”.

The Dubai-based company submitted a 230 pence-a-share offer in late May, valuing Wood Group at £1.6bn, after three previous unsolicited proposals were rejected.

Wood Group has entered into takeover talks with Sidara, but after completing its due diligence, Sidara announced on Monday that it does not plan to submit a bid.

He said the decision was taken “in light of increasing geopolitical risks and financial market uncertainty.”

He must wait six months under city procurement rules before making another offer for Wood Group.

Following the announcement, John Wood Group shares fell 38.1 per cent to £1.22 by midday Monday, making them by far the biggest fallers on the FTSE 250 index.

Danni Hewson, director of financial research at AJ Bell, commented: ‘The global outlook has changed, market volatility has taken hold of investor sentiment and Sidara may well be breathing a sigh of relief that the long courtship ended as it did, when it did.

‘Companies are battening down their hatches as they survey the state of the world and prepare to weather the potential storm.’

Sidara is the latest venture since private equity giant Apollo Global Management abandoned its attempts to acquire Wood Group.

Apollo made five bids for Wood Group, the last valuing the company at £1.7bn, before pulling out in May 2023 without giving any explanation.

Wood Group has avoided the fate of several large London-listed companies that have gone into foreign ownership in recent years, including G4S, Neptune Energy, Hotel Chocolat and supermarket chain Morrisons.

Many more have accepted multi-billion-pound takeover offers in recent months, including Robinsons squash maker Britvic, cybersecurity specialist Darktrace, music rights investor Hipgnosis Songs Fund and video game services company Keywords Studios.

Wood Group employs more than 35,000 people in 60 countries providing consulting and engineering services to the energy and materials industries.

In its latest half-year results, the company reported that adjusted earnings before the incidents rose 4 percent to about $210 million as margin growth offset lower revenue.

Revenue fell about 6 percent to $2.8 billion, partly attributed to problems at its minerals division and a “strategic shift” away from engineering, procurement and construction work.