Oil and gas engineering firm John Wood Group has seen its shares jump higher after revealing it has decided to “engage” with its US private equity suitor to firm up an offer after a £1.7bn takeover approach.
Aberdeen-based Wood Group’s stock jumped more than 7% in morning trading on Monday following the decision to finally warm towards Apollo Management’s advances, having previously rejected four proposals from the firm.
The company said it was now looking to see if a firm offer can be made on the same financial terms as the fifth proposal put forward earlier this month for 240p a share in cash, valuing the company at around £1.66bn.
It said the move comes after talks with shareholders.
Wood Group said: “Having now weighed all relevant factors, particularly feedback received from Wood shareholders, the board has decided to engage with Apollo to see if a firm offer can be made on the same financial terms as the final proposal.
“Accordingly, the board will grant Apollo access to due diligence materials.”
Apollo now has to announce a firm intention to make an offer for Wood Group by May 17 after an extension was granted by the City’s Takeover Panel to the original April 19 deadline.
Apollo’s fifth and final proposal represents a 17% premium to Wood’s closing share price on April 3, the day before Apollo made the latest approach, and a 59% premium and 20% increase on the first approach.
Wood Group revealed in February that it had rejected three unsolicited approaches from Apollo, saying at the time that it believed each “significantly undervalued the repositioned group’s prospects”.
Wood has around 35,000 staff, largely specialising in engineering and consultancy for the energy, minerals, chemicals and life sciences sectors.
It offloaded its environmental consulting division last year in a move to reduce its debt by more than one billion US dollars (£805m).
The company appointed a new chief executive – Ken Gilmartin – last summer, who has been leading a strategy overhaul at the firm.
It has been left with a hefty debt pile since taking over rival Amec Foster Wheeler for £2.2bn in 2017, which also saw it face legacy lawsuits, including a 115 million US dollar (£92.6m) settlement made last year for a damages claim filed in 2016.