Sidara trims Wood Group bid to 30p a share, board open to backing deal

Dubai-based Sidara has lowered its potential takeover bid for John Wood Group to 30 pence per share, valuing the company at £207.55 million. Despite this reduction from an earlier 35 pence per share proposal, Wood Group's board is now prepared to recommend the revised terms, following Sidara's completed due diligence and alignment on financing. The U.K. Takeover Panel has extended the firm offer deadline to August 28, amidst Wood Group's significant financial struggles, including a 72% year-to-date share price decline and accounting irregularities.

Analysis

Dubai-based Sidara has lowered its potential takeover proposal for John Wood Group (LON:WG) to 30 pence per share, valuing the energy-services provider at £207.55 million. This represents a significant reduction from the 35 pence per share offer made in April. Despite the lower valuation, Wood Group's board has indicated it is now prepared to recommend the revised terms should a firm offer be made, signaling a weakened negotiating position. This stance is contextualized by Wood Group's severe operational and financial distress, including a 72% year-to-date share price decline, contract write-offs, and the discovery of "material weaknesses" in its accounts in February. The successful completion of due diligence by Sidara and the alignment on a refinancing package removes a key obstacle to the deal. The UK Takeover Panel has set a new deadline of August 28 for Sidara to submit a firm offer, creating a clear timeline for a potential resolution for the struggling company.

Key Decisions for Investors

• Investors should consider that while the 30 pence per share proposal provides a potential price target, the offer remains non-binding, and the deal's failure would expose the stock to severe downside risk given the company's underlying operational and accounting issues.
• The reduction in the offer price after Sidara's due diligence strongly suggests that Wood Group's financial condition is worse than previously understood, warranting extreme caution for any prospective buyers.
• The key catalyst to monitor is the August 28 deadline for a firm bid, as a failure by Sidara to formalize its offer would likely result in further significant share price depreciation.