Wood Group posts quarterly turnover rise as Apollo bid deadline nears

John Wood Group has reported stronger first-quarter revenues less than a week before a private equity suitor’s deadline to declare a concrete takeover offer for the business.

The energy services provider upheld its annual forecasts as it revealed turnover for the quarter ending March of approximately $1.45billion (£1.25billion) following healthy demand across all business units.

Its order book at the end of March remained high at around $5.7billion, although this was around $300million lower than in December, which it attributed to the phasing of major multi-year awards in its operations division.

Despite significant economic uncertainty, the firm has upheld its annual forecasts for adjusted underlying earnings to expand by mid to high single-digit percentage figures.

‘While we remain mindful of the uncertain economic outlook, our expectations for 2023 remain unchanged,’ the company told investors on Thursday.

Headquartered in Aberdeen, Wood employs over 35,000 people across 60 countries in sectors ranging from US shale to North Sea oil, carbon capture and wind power.

The group is currently the subject of a takeover approach from private equity giant Apollo Global Management, which has until 17 May to disclose a firm intention to make an offer for Wood or walk away.

Having turned down four previous proposals, Wood agreed to engage with Apollo last month after receiving a £1.7billion bid from the American asset manager.

At 240p per share, the deal is 40 pence more than the first offer and represents a 17 per cent premium to Wood’s closing share price the day before the latest bid was made.

Apollo’s interest in Wood comes amidst a surge of London-listed companies being snapped up by foreign private equity houses attracted by a weaker pound and cheaper valuations.

Another acquisition target of Apollo is THG, which has seen its share price slump by over 80 per cent since its initial public offering three years ago.

Matt Moulding’s e-commerce business has suffered from a slowdown in online sales, corporate governance concerns and massive losses caused by investment in infrastructure and staff.

Other British firms which received takeover bids in April included property fund Industrials REIT, payments processor Network International and veterinary products developer Dechra Pharmaceuticals.

Sureserve, a social housing maintenance contractor, also agreed a £214.1million approach from Cap10 Partners.

Victoria Scholar, the head of investment at Interactive Investor, said: ‘The UK market has underperformed Europe in recent years amid reputational damage since Brexit, providing attractive valuations for acquisitive companies.

‘Plus, the pound suffered last year, adding to the UK’s allure but with sterling rebounding, time is ticking for overseas buyers looking to capitalise on the FX advantage.’ 

John Wood Group shares were flat at 221.2p on Thursday morning. They have expanded by about 56 per cent since the start of the year.