Apollo Global Management Inc. has walked away from a possible takeover of John Wood Group Plc after a months-long pursuit of the Scottish engineering group.
(Bloomberg) — Apollo Global Management Inc. has walked away from a possible takeover of John Wood Group Plc after a months-long pursuit of the Scottish engineering group.
The private equity firm said in a statement on Monday that it does not intend to make an offer for Aberdeen-based Wood. The news sent Wood shares down as much as 41% in London for their biggest intraday fall since March 2020.
Apollo’s decision not to pursue a deal comes after Wood granted it access to due diligence materials in April. Wood had already rejected four approaches from Apollo before a £1.66 billion ($2.1 billion) proposal convinced it to open its books.
New York-based Apollo is one of the world’s largest buyout firms and has been on the acquisition trail in the UK. But the firm is known for its reluctance to risk overpaying for assets — a stance that’s seen it miss out on possible acquisitions of education publisher Pearson Plc and bookmaker William Hill in recent times. Just last week, talks on a takeover of UK online retailer THG Plc collapsed.
“It is no surprise Apollo has walked away,” Graham Simpson, head of Canaccord Genuity’s Quest Research, said in an emailed statement. “Apollo has shown it is not afraid to enforce capital discipline, preferring to walk away rather than pay more than it wants, thereby diluting the return on investment.”
Shares in Wood were down 33% at 10:05 a.m. in London, giving it a market value of £1 billion. The stock had risen more than 60% 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.
Wood released its own statement on Monday, saying its board remains confident in the company’s strategic direction and long-term prospects. There is “good momentum” across all business units, with expectations for the full year unchanged, it said.
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.
Like its peers, Apollo continues to grapple with a tricky market for securing financing for deals. Apollo found lenders reluctant to provide too much leverage for backing a buyout of Wood, people familiar with the matter said, asking not to be identified discussing confidential information.
While sentiment among lenders showed some signs of improving during the first quarter, leading to a brief flurry of buyouts, things soured in the wake of high-profile banking collapses in the US and Europe. Still, there continues to be an interest in UK-listed companies. Since the start of 2022, take privates have been agreed for power producer ContourGlobal Plc by KKR & Co., repair site HomeServe Plc by Brookfield Asset Management Ltd. and events organizer Hyve Group Plc by Providence Equity Partners.
–With assistance from Dinesh Nair and Amanda Jordan.
(Updates with additional detail on Apollo throughout.)
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