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Oil services company John Wood Group rejects £1.4 billion takeover bid | Mergers and acquisitions

British oil services company John Wood Group has rejected a £1.4 billion takeover bid from Dubai rival Sidara that “fundamentally undervalued” the company.

Aberdeen-based Wood is the latest London-listed British company to face takeover speculation amid deepening concerns that British-listed shares are undervalued compared to other markets.

In a statement, Wood’s board said the FTSE 250-listed company had received an unsolicited offer from Sidara to acquire it at a price of 205 pence per share, but had unanimously rejected the offer.

“The board, together with its financial advisors, has carefully considered this proposal and has concluded that it fundamentally underestimates Wood and his future prospects,” he said.

Sidara’s spokesman declined to comment on the matter.

This approach comes about a year after US private equity firm Apollo Global Management, after multiple attempts and offers, abandoned its offer to buy Wood at 240 pence per share, without giving any reason.

Wood is not the only takeover target listed on the London Stock Exchange. A multi-billion-dollar bidding war appears to be brewing around the FTSE 100-listed Anglo-American mining company after it rejected a bid from rival BHP as undervalued. Swiss mining company Glencore is also believed to be developing an approach, and there is speculation that British-Australian miner Rio Tinto could follow suit.

Last year, BP was forced to reassure investors that it was not a takeover target as its shares continued to lag behind U.S. competitors.

Wood’s share price is well below pre-pandemic levels of around 600p per share. Shares jumped from 164p to 204p in early trading on Wednesday following the company’s announcement, and were at around 188p by midday.

It is under pressure to revive its falling market valuation after activist investor Sparta Capital Management called on Wood’s board to conduct a strategic review of the business and “actively seek alternative solutions” to the lagging UK share price – including a possible sales .

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Franck Tuil, who founded Sparta in 2021 after leaving investment firm Elliott Asset Management, said: “If UK public markets are unwilling or unable to engage with Wood’s story, we believe you should undertake a strategic review and actively seek alternative solutions “.

He added that “it may be time to recognize that the next chapter in Wood’s journey can best be supported by different owners” and urged the group “to explore the best way to maximize shareholder value, including selling the company.”