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The UAE’s Sidara and the UK’s troubled Wood Group are set to extend a deadline for takeover discussions, as they await the completion of a report into the Aberdeen-based company’s governance and auditor sign-off of its annual accounts.
Sidara, which walked away from a roughly £1.6bn deal for Wood last year, restarted detailed takeover discussions a month ago.
Wood’s market capitalisation has collapsed to about £300mn since a February trading update that showed it was continuing to burn through cash and which highlighted governance failings.
Sidara’s approach that month sparked off a shortlived rally in Wood’s shares. That has since largely reversed, however, and expectations around price have been tempered by the drawn out discussions.
Under UK takeover rules, Sidara faces a deadline of Monday afternoon to make a firm offer or walk away — unless Wood agrees to an extension. The two sides are close to a deal to extend the deadline, according to people familiar with the matter.
An extension would allow time for the results of an independent governance review by Deloitte of Wood’s projects division, the people said. The group is also awaiting the sign-off of Wood’s 2024 accounts by auditor KPMG.
Both Sidara and Wood Group declined to comment.
Sidara is a privately held network of engineering and design companies run from the UAE. It was formerly known as Dar Al-Handasah, which was founded in 1956.
Wood was one of the homegrown success stories of the UK’s development of the North Sea, valued at more than £5bn in 2018 as it expanded its global footprint and pursued ambitious plans to transition from an oil services provider to a full-scale engineering and consulting firm.
But the company has struggled since shortly after its £2.2bn takeover of Amec Foster Wheeler in 2017.
In a February, Wood said it had found “material” weakness in its governance and that its free cash flow would be negative by as much as $200mn this year, after previously forecasting it would be positive.
Wood’s chief financial officer Arvind Balan was also forced to step down on February 19 after admitting misstating his accountancy qualifications, following questions from the Financial Times.
Stock in the Wood Group closed down 13 per cent on Friday to 38.4p per share, far below Sidara’s final offer last year of 230p per share.
Negotiations between the two sides this time have been conducted at a far lower price to reflect recent trading, according to the people.
Wood Group is working with advisers to navigate parallel refinancing talks with its lenders alongside the takeover talks. The company is seeking to refinance $1.4bn of debt by October 2026.
Any bid is likely to reflect the expected need to recapitalise the company.
