Scots oil and gas engineering firm suitor drops £1.7bn takeover plans

US firm Apollo Management said it would not be making an offer for Aberdeen-based Wood Group.

Scots oil and gas engineering firm John Wood Group suitor Apollo Management drops £1.7bn takeover plans iStock

John Wood Group’s private equity suitor has ditched plans for a £1.7bn takeover of the oil and gas engineering firm.

US firm Apollo Management said it would not be making an offer for Aberdeen-based Wood Group, just two days before the May 17 deal deadline to make a firm bid or walk away.

Shares in Wood Group fell by 41% at one stage on Monday morning after the announcement, with the stock having soared since February amid the takeover interest.

Apollo had put forward five bid proposals, with the fifth for 240p a share in cash, valuing Wood Group at around £1.66bn.

Wood Group rejected the first four approaches, saying they undervalued the group, but finally announced last month it had decided to engage in talks with Apollo after the fifth proposal, having consulted with shareholders.

In response to Apollo’s decision not to bid, Wood group said its board “remains confident in Wood’s strategic direction and long-term prospects”.

It said: “Following a transformative year in 2022, including new executive leadership and a new strategy, Wood is well placed to deliver substantial value for shareholders.”

Wood Group added: “The board is grateful for the substantial engagement of its shareholders and the support of its customers and employees throughout this process.”

Wood Group first 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.

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