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Sidara is exploring cutting the price of its takeover offer for Wood Group given the probe into the engineering services company by Britain’s financial regulator.
The UAE-based group is concerned about legal exposure that could emerge from the Financial Conduct Authority’s investigation into Aberdeen-based Wood, which was announced last month, according to people familiar with the matter.
Sidara made a nonbinding conditional proposal in April to buy the crisis-hit company for £242mn, or 35 pence a share, and has until July 28 to make a firm offer, walk away or get an extension. The deadline has already been extended several times.
It is not clear by how much Sidara might reduce the price, if it does make a firm offer. The privately held group, which comprises a network of engineering and design companies, is also frustrated about the time it is taking Wood to file its accounts for 2024, people familiar with the matter said.
Wood’s shares have been suspended since April because of the delay in publishing the accounts. Sidara has made publication of the accounts a condition of any firm offer.
Any reduction in the price of the potential takeover would be a further blow for Wood, which handles oil and gas as well as mining projects around the world, led by chief executive Ken Gilmartin and chair Roy Franklin.
The board said in April it would be minded to recommend to shareholders Sidara’s £242mn takeover, which includes the UAE buyer possibly injecting $450mn into the company.
The company rejected several far higher proposals from Sidara last year, arguing they undervalued the company before the UAE group eventually walked away from a £1.5bn offer. Wood’s share price has subsequently plummeted amid regular bad news.
The FCA investigation, which Wood announced in June, covers the period from January 1 2023 to November 7 2024 and follows an independent review by Deloitte.
Wood commissioned the review into its projects division last year after “dialogue” with its auditor KPMG. It said in March that following the review it had uncovered “material weaknesses and failures in the group’s financial culture”.
These included “inappropriate management pressure and override to maintain previously reported positions” and “information being inappropriately withheld from, and unreliable information being provided to, Wood’s auditors”.
Wood has said it will need to restate accounts for 2022 and 2023 in the wake of the Deloitte review.
At the time of suspension of its shares, Wood’s market capitalisation was £127mn, down from a peak of £5.3bn in 2018.
The company expanded rapidly in 2017 when it paid £2.2bn for rival Amec Foster Wheeler, but has since struggled with high debts and low cash flow.
Wood and Sidara declined to comment.
