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UK engineering company John Wood Group has sold two businesses for $165mn as it seeks to persuade investors of its future as a standalone company, following two collapsed takeover bids in just over a year.
Wood, based in Aberdeen in north-east Scotland, said it was selling its stakes in EthosEnergy, a joint venture focused on turbines and other rotating equipment, and CEC Controls, an industrial and process control systems business, as part of a plan to sell off non-core divisions.
The move comes as Wood mounts a turnaround effort and has faced pressure to put itself up for sale, or move its listing from London to New York. It also follows the recent collapse of a takeover approach from Dubai’s Sidara.
Wood expects net cash proceeds of about $125mn from the two disposals, which are expected to complete this year. As part of the agreement, Wood said it would issue a loan to EthosEnergy that would generate a further $42mn plus interest five years after the deal’s completion.
Wood chief strategy officer Jennifer Richmond said the transactions were “further evidence of progress of our strategy” and that the company would continue to review its portfolios in line with plans to simplify its operations.
Wood is currently undergoing a three-year turnaround, and in August reported an operating loss of $899mn for the six months to the end of June, down from a $23mn profit in the same period the previous year.
The company, which has struggled to cut borrowing levels since taking over Amec Foster Wheeler in 2017, said the loss included an impairment charge of $815mn, as well as other costs related to its reorganisation.
Meanwhile its shares tumbled almost 40 per cent when Sidara said it was walking away from its plan to buy the company in August. Sidara, also known as Dar Al-Handasah, opted not to go ahead with a fourth and “final” takeover bid valuing Wood at 230p per share.
Wood’s shares have been languishing near 130p since Sidara abandoned its bid, citing “geopolitical risks and financial market uncertainty” that had sent global stocks crashing in early August. Its shares were broadly flat in morning trading on Wednesday.
Sidara’s decision came after private equity firm Apollo Global abandoned a 240p-a-share offer in May 2023 that valued Wood at about £2.2bn, including debt.
The failure of those bids and Wood’s weak share price performance have piled pressure on chief executive Ken Gilmartin to speed up plans to deliver growth. This month Gilmartin told the Financial Times that the company was confident of winning back investor confidence by delivering on a pledge to cut debt and generate “significant” free cash flow from 2025.
His comments came after activist shareholder Sparta Capital Management this year called for the company to “actively seek alternative” solutions to its UK listing, which included switching to New York. Gilmartin said last week that would not be a “cure” for Wood’s problems.
