US private equity giant abandons bid for Wood

Apollo has abandoned plans to buy Wood Group after pursuing it for four months.

The New York-based private equity giant said it would not make a formal offer for the FTSE 250 group, sending shares in the engineering group tumbling 34.4pc, or 75.4p, to 143.6p.

Apollo saw four proposed bids rejected by Wood earlier this year.

But Wood’s board opened up its books last month when the private equity group floated a fifth offer worth 240p a share – or £1.7bn.

Apollo had until tomorrow to table a formal bid. But after weeks of talks, it has walked away, ending its interest in another British firm after casting its eye over everything from ecommerce firm THG to educational publisher pearson without completing a deal.

Apollo did not go into detail about its decision to abandon the takeover. But a source said it had concluded that a deal was not worth pursuing at the 240p bid price. The decision also means Apollo cannot make another approach for at least six months.

Wood’s share price surged in February when Apollo’s approaches to the business were revealed. But after yesterday’s plunge, the stock has erased nearly all of the gains made so far this year.

Aberdeen-based Wood employs more than 35,000 staff across 60 countries in sectors ranging from US shale to North Sea oil, carbon capture and wind power.

Responding to Apollo’s decision, the group said it remained ‘confident’ in its strategy and prospects, adding that it was ‘well placed to deliver substantial value for shareholders’. But some City analysts struck a gloomy tone following the private equity firm’s departure, with broker Jefferies saying the decision was an ‘obvious negative’ for the stock. Apollo’s exit is the second for the private equity firm in less than a week after takeover talks with THG collapsed on Friday. Its troubles in securing a takeover deal for Wood come despite many london-listed companies suffering from share price discounts, in contrast to their peers in the US, leaving them vulnerable to opportunistic bids. The engineering firm itself was warned in December by activist shareholder Sparta Capital that it would be vulnerable to a takeover swoop if it did not boost its valuation by buying back shares.

Apollo’s multiple swings at the UK market come as private equity groups look to spend billions in cash built up over recent years as deal-making activity dries up elsewhere in the market.

British companies have come under a barrage of takeover attempts by private equity firms in recent months. Credit card payment processor Network International found itself at a centre of a bidding war in April. Canadian giant Brookfield Asset Management tabled a £2.13bn offer days after a £2.1bn proposal from private equity group’s CVC Capital and Francisco partners.

Animal drug- maker Dechra pharma and smart meter services group Sureserve have also ended up in the crosshairs.