The biggest company in Aberdeen, Wood, was the target of one of the largest private-equity businesses in the world during 2023.
It came after a steep decline in its share price.
But the long-running pursuit by Apollo Global Management eventually came to nothing.
This outcome will have been welcomed by Wood employees in the Granite City.
There were fears of a large number of job losses if New York-based Apollo had gained control of the company, and decided to relocate or streamline its Aberdeen operation.
Ruthless vultures?
Many private equity firms have a bad reputation, as they are often seen as ruthless vultures who swoop in to buy struggling companies, slash costs and then sell them for a profit.
Consulting and engineering group Wood has grown massively over recent decades.
It currently has a worldwide workforce of around 35,000 people, with more than 6,000 of them in the UK.
The company has previously enjoyed much success in markets it serves around the globe, but times have been tough in recent years.
This was reflected by its shares plunging from £9 in 2013 to just £1.12 in October 2022.
Apollo mission takes off after Wood’s shares plummet, but ends in failure
Wood’s share price slump presented an opportunity for Apollo.
However, last May, after weeks of pursuing the Aberdeen group, the US company decided against a takeover.
Its fifth and final proposal was worth £2.40 a share, valuing Wood at £1.7 billion.
The approach had initially boosted Wood’s shares, which jumped to £2.25 last March.
After Apollo walked away, shares in Wood dipped to below £1.50 and their value has not improved significantly since then. At the time of writing this article, the shares were sitting at £1.55.
The exit of Apollo does not mean Wood is now secure from the attention of any other interested party seeking a bargain.
There are many parts of the Scottish group which would be attractive to other potential bidders.
And the move by Apollo will have alerted them to the opportunity to take over Wood.
Positive noises over current trading
The most important factor for the Aberdeen firm to protect its independence is achieving a significant recovery in its share price, which would deter other would-be buyers.
Investors will have been boosted by the company’s positive trading update for 2023, issued last month.
📚Four years on, Wood continues its commitment to investing $10M USD by 2030 into community educational support. Find out about the 23 causes #TeamWood supported across nine countries in 2023 ➡ https://t.co/UUn4ZXNF2R #LeadingSDG4 #EducationDay pic.twitter.com/uPrhP1uSr5
— Wood (@Woodplc) January 24, 2024
Chief executive Ken Gilmartin said: “We are now one year into our strategic growth journey and our results continue to show clear progress.
“We have delivered strong revenue and Ebitda (earnings before interest, taxes, depreciation and amortisation) growth, improved our underlying cash generation, grown our order book and continue to see an acceleration in the proportion of sustainable solutions within our pipeline.
“We are confident that our actions, business model and strategy are delivering and look forward to giving a further update in March.”
Highlights for Wood last year include annual revenue of around £4.75bn, up 9% year-on-year, with good growth reported across all business units.
Also, the order book of around £4.8bn was ahead 4% on a comparable basis.
At the start of last year Mr Gilmartin predicted a bright future for Wood and its home city. He said the company was designing the future for many important industries around the world.
All this is happening from the Granite City base, where the local workforce deals with projects from clients in dozens of countries.
Tomorrow’s world
The CEO said: “We are modelling tomorrow’s world from right here in Aberdeen.”
He also predicted the Granite City workforce could conceivably grow from 4,500 to 6,500 in the years ahead, if enough workers with the right skill sets are available.
Mr Gilmartin highlighted multiple benefits of Wood being based in the Aberdeen.
The boss explained: “We have proximity to key clients, access to a highly-skilled talent pool and our heritage as a long-standing member of a vibrant business community.”
Wood has come a long way since Sir Ian Wood saw the huge opportunity presented by the birth of the UK offshore oil industry in the 1970s.
He transformed the family-owned fishing business into a multinational oil services company listed on the London Stock Exchange.
But there is much more to Wood than just energy services. Materials now makes up one-third of the business, while energy services is responsible for the other two-thirds.
Materials is a wide-ranging sector which takes in everything from designing facilities for pharmaceutical companies to delivering projects in the transportation and water sectors.
Mr Gilmartin was keen to highlight the continuing importance of the company’s North Sea operations, which have an offshore workforce of 1,100 – making up almost one-quarter of the Aberdeen team.
He said: “Wood has a long heritage in Aberdeen. It’s where it all started and it will continue to be a key hub moving forward.”
Investors in the company and its workforce will be keeping a close eye on how Wood performs in the months ahead, as any significant downturn in the share price could see other possible bidders come forward.
Big takeover of Ace Winches rounded off 2023
There was a significant deal in the north-east at the end of last year when Ashtead Technology took over Ace Winches.
Westhill-based Ashtead acquired Ace, which has its headquarters at Towie Barclay Works, near Turriff, from founders Alfie and Valerie Cheyne for £53.5 million.
The transaction saw the buyer’s headcount increase from 320 to more than 520, with around 400 based in Aberdeenshire.
‘Strong industrial logic’
Ashtead chief executive Allan Pirie said: “The deal provides strong industrial logic, adding complementary capabilities to bolster our mechanical solutions service line to deliver an enhanced and more integrated offering to our customers.
“With a 31-year operating heritage, Ace Winches is a global market leader in its field with an unrivalled reputation. It has been a business we have admired and followed for a while as we share similar values and strengths, including a relentless commitment to quality, service and operational excellence.
“Both businesses have deep-rooted history and heritage in Aberdeenshire, whilst delivering for our customers globally.”
Mr Pirie added: “As a combined business, we will continue to strengthen our capabilities in Aberdeenshire.”
He said the enlarged company aimed to do this while “leveraging our strong international footprint and infrastructure to drive continued international expansion of our business, and deliver Ashtead Technology products and services to a larger global customer base.”
Mr Cheyne said: “Ashtead Technology is an outstanding business with a first-class reputation. The clear synergies between both companies will give us the platform required to accelerate our growth.”
Ace was Ashtead’s eighth buy in the past six years and followed acquisitions of two other Aberdeenshire firms, WeSubsea and Hiretech, in 2022.
In 2021, Aberdeen’s Balmoral Group sold its holding in Ace back to Mr Cheyne. Balmoral had built a 70% stake in Ace from 2017-19.
The Granite City firm said the Cheyne family had exercised an option allowing it to buy Ace back.
Conversation