Scottish engineering company John Wood Group Plc said it has decided to engage with Apollo Global Management Inc. to see whether the private equity firm can make a firm offer for its business.
(Bloomberg) — Scottish engineering company John Wood Group Plc said it has decided to engage with Apollo Global Management Inc. to see whether the private equity firm can make a firm offer for its business.
Apollo earlier in April submitted a £1.66 billion ($2 billion) proposal for Wood, which had already dismissed four takeover approaches from the suitor as too low. Having previously been reluctant to grant Apollo further access to its business, Wood said Monday it would allow it to view due diligence materials.
“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,” the Aberdeen-based company said in a statement. The date by which Apollo must announce a firm intention to bid has been extended to May 17.
Apollo has said its 240-pence-a-share cash proposal would “provide a compelling opportunity for Wood’s shareholders to monetize their holdings.”
Shares in Wood have risen more than 50% this year on the back of Apollo’s interest, but took a knock in late March after the company reported a full-year operating loss. The stock jumped more than 7% on Monday, trading at 227 pence as of 9:30 a.m. in London.
The shift by Wood is a “small positive,” Jefferies analysts said in a note. “While some risk remains regarding financial terms, the shares should now close a further incremental gap to the 240-pence offer price as the likelihood of offer and completion at that price is derisked by today’s announcement.”
Wood offers a range of services to energy businesses, including engineering support, consultation and management of assets. It has been looking for ways to unlock the value it feels has not been reflected in its share price.
Apollo is one of the world’s biggest private equity investors and has been on the acquisition trail. But the New York-based firm is known in the leveraged-buyout world for its reluctance to risk overpaying for assets, a stance that’s seen it miss out on several possible deals in recent times.
–With assistance from Alexandra Muller.
(Updates with shares in fourth paragraph, analyst comment in fifth.)
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