The chief executive of Scotland’s biggest oil services firm has insisted the company has a bright future weeks after a Middle Eastern bidder walked away following a review of its books.
Aberdeen-based Wood looked set to surrender its independence after receiving a £1.5 billion takeover bid from Sidara following a period in which investors complained about its share price performance.
However, Sidara decided not to proceed with a formal offer after completing due diligence checks.
While Dubai-based Sidara cited rising geopolitical risks and financial market uncertainty, Barclays analyst Mick Pickup said investors might ask if there was something untoward under the Wood hood following its withdrawal.
But claiming “the world needs Wood” chief executive Ken Gilmartin yesterday dismissed suggestions that Sidara’s move reflected concerns about the prospects of the group, which is a mainstay of the engineering sector. The group employs around 4,500 people in Aberdeen and its North Sea operations.
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Mr Gilmartin said: “The walk away was as they said because of heightened geopolitical risk that then increased financial uncertainty.”
He claimed Wood is making good progress under a three-year turnaround plan initiated after he succeeded Robin Watson in July 2022. This involves simplifying the group and increasing its focus on lower risk business rather than large fixed-price contracts.
The company has developed the expertise to allow it to capitalise on increased investment in lower carbon energy systems around the world while supporting the oil and gas production that Mr Gilmartin reckons will be required for energy security for some time.
“There is no net zero in the world without the people we have,” said Mr Gilmartin. “We’re very important to energy security, the energy transition piece …sustainable solutions, decarbonising, reducing CO2 emissions and we are continuing to hire and grow our headcount.”
Mr Gilmartin said Wood is recruiting for 700 posts across the UK.
He expects the group to benefit from supportive macro trends affecting the energy sector, the high degree of complexity of the work it does and the fact it has a very motivated workforce.
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He is confident that Wood can achieve strong long-term growth to the benefit of investors.
However, Wood’s share price has plunged since Sidara walked away. The shares sold for 134.4p on Tuesday afternoon, compared with 211.4p in late July.
Sidara made an unsolicited approach for Wood in May at 205p. The company increased the price of its indicative offer three times, to a final 230p. Wood agreed to engage with Sidara after receiving feedback from investors.
Sidara completed due diligence on Wood amid concerns that events in Gaza could trigger a wider conflict in the Middle East. These fuelled volatility on global stock markets. Labour’s campaign for the general election held in July included plans for North Sea tax hikes.
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