Wood has agreed to sell Aberdeen-based Ethos Energy to private equity investors in a deal worth $137 million (£104m) to the Scottish engineering group.
Ethos, which employs 3,600 staff globally, will be taken over by US-based One Equity Partners with the transaction expected to close by the end of this year. Along with the separate sale of another Wood subsidiary, CEC Controls, the group stands to make a total of $165m amid ongoing efforts to improve its profitability and share price performance.
Wood owns 51% of Ethos Energy, a joint venture set up in 2014 in conjunction with Germany's Siemens. Ethos manufactures turbines and other rotating equipment for the industrial sector.
READ MORE: Engineering saga as Wood confirms sale of major Scottish employer
One Equity will pay $95m net cash upon completion, and Wood will issue a loan note to Ethos that will generate a further $42m plus interest five years after the deal closes.
CEC Controls is headquartered in the USA and employs about 220 people globally making systems for industrial and process control.
Wood has agreed to sell its equity in this business to SCIO Automation, a global industrial group based out of Germany. The deal is expected to generate net cash proceeds of roughly $29m upon completion and is also expected close before the end of this year.
Wood has struggled to cut its borrowing levels since its £2.2 billion acquisition of London-based Amec Foster Wheeler in 2017. The group is now half-way through a three-year turnaround strategy under the leadership of Ken Gilmartin, who has spent much of his time fending off takeover attempts since becoming chief executive in July 2022.
Ethos Energy is part of Wood's investment services business unit and contributed $34m of adjusted earnings to the group's results in 2023. CEC generated $66m of revenues last year and contributed $6m to earnings.
Jennifer Richmond, chief strategy officer at Wood, said the sale of the two non-core businesses is "further evidence of progress of our strategy".
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"We continue to review Wood's portfolio in line with our strategic priorities to be selective in our markets and capabilities and steadfast in our commitment to simplify Wood and deliver greater cash flexibility," she added.
"There is a strong strategic fit between both these companies and their buyers, and we are confident both businesses will thrive under new ownership."
The disposals follow last week's interim results from Wood in which the group posted a post-tax loss of £983m.
That figure included an $815m charge after Wood concluded that some of its businesses would make lower profits than previously expected. Mr Gilmartin said the bulk of this related to Amec Foster Wheeler, which was acquired under his predecessor Robin Watson.
Mr Gilmartin described the write-offs as a "tidy-up" process that would not trigger cash charges. He further noted that the group's order book grew by 4% in the first half to $6.2bn, with the sales pipeline up by 8% in the second quarter.
READ MORE: Middle East firm withdraws takeover interest in Wood
Wood has fended off a number of takeover approaches during the past two years, the first being a series of overtures from US private equity group Apollo Asset Management. Apollo eventually abandoned the effort in May 2023, dropping a mooted offer of 240p per share that would have valued Wood at about £2.2bn, including debt.
Sidara, also known as Dar Al-Handasah, began stalking Wood in May of this year but dropped plans to make a 230p per share bid earlier this month after completing due diligence, citing rising geopolitical risks and uncertainty across financial markets.
broker Peel Hunt said the sale price of Ethos represented a lower enterprise multiple of 4.0x than the 6.0x it expected. The sale price of CEC at a multiple of 5.0x was higher than the 3.0x anticipated.
Shares in Wood closed yesterday's trading little changed at 133.6p.
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