Dubai’s Sidara announced on Monday that it is abandoning its plan to acquire the UK’s John Wood Group, citing rising geopolitical risks and financial market uncertainty. This decision led to a significant drop in Wood Group’s shares, which fell by 40%.
Sidara had previously made four unsuccessful buyout attempts due to disagreements over valuation. The Dubai-based engineering and consulting firm had been under pressure to either make a firm offer or withdraw by the upcoming Friday, resulting in its decision to walk away.
The ongoing 10-month conflict between Israel and Hamas has raised concerns about potential instability spreading throughout the Middle East. This region is crucial for Wood Group’s strategy as it contributes approximately 18% of the company’s total revenue.
Dubai’s Sidara Abandons Plan to Acquire UK’s John Wood Group Due to Geopolitical Risks and Market Uncertainty
The British engineering group, which offers consultation, asset management, and engineering services, operates in over 60 countries, with significant interests in the Middle East and Africa.
Despite Sidara’s withdrawal, Wood Group expressed confidence in its strategic direction. The company affirmed its forecasts for 2024 and beyond, projecting core earnings growth that should surpass medium-term targets. Additionally, Wood Group expects to generate substantial free cash flow by 2025, indicating a strong financial outlook despite the recent challenges.
Sidara had previously proposed several offers for Wood Group, ranging from 205 to 230 pence per share, with its latest bid valuing the company at approximately £1.56 billion ($1.99 billion). This bid was intended to be its final offer, but the decision to withdraw means that the acquisition will not proceed.
Sidara’s retreat follows a similar situation with U.S.-based Apollo Global Management, which also abandoned its £1.7 billion bid for Wood Group after multiple rejections. Activist shareholder Sparta Capital Management has been advocating for Wood Group to consider selling itself or reevaluating its UK listing in light of these ongoing challenges.
