Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The boss of UK engineer John Wood Group has insisted the company can deliver growth and boost the share price after it plunged this month following the collapse of a second takeover bid in just over a year.
Ken Gilmartin, who has been chief executive at the group since July 2022, also ruled out moving the company’s listing to New York, despite pressure from a leading investor activist.
Sparta Capital Management said earlier this year that Wood should “actively seek alternative” solutions to its UK listing, which included switching to New York. Gilmartin said this would not be a “cure” for Wood’s problems.
The company’s shares fell almost 40 per cent two weeks ago after Dubai-based Sidara, known as Dar Al-Handasah, walked away from a plan to acquire Wood for 230p a share, citing “geopolitical risks and financial market uncertainty” as global markets plunged.
Wood’s share price has barely moved since then, although it gained 1 per cent to 134p after the company unveiled an 8.5 per cent jump to $219mn in its first-half adjusted earnings before interest, taxes, depreciation and amortisation on Tuesday.
Sidara’s failed takeover bid followed a similar move by US private equity company Apollo Global, which decided against pursuing a deal for Wood in May 2023.
Apollo’s 240p-a-share bid had at the time valued Wood at about £2.2bn, including debt. The stock has fallen 20 per cent since the start of the year, giving Wood a market capitalisation of £927mn.
Although the company has developed plans to improve costs and pricing, the weak share price has put pressure on management to speed up plans to deliver growth.
Gilmartin told the Financial Times that the company had a bright future on its own and that he was confident of winning back investor confidence by delivering on a pledge to cut debt and generate “significant” free cash flow from 2025.
“The one piece that investors will ask [for] will be that return to positive free cash flow,” Gilmartin said. “And when we can return to that sustainable free cash flow, which is front and centre on everything that we do . . . that’s the most important thing for our shareholders right now.”
Wood has faced pressure to sell itself as some investors believe it would have more flexibility to execute its recovery strategy as a private company.
It has also been under pressure to move its listing from London. Gilmartin said the company had considered but rejected such a move.
“Is that going to be the thing that cures all of the issues that you have?” he said. “We need to continue to grow. We need to do that sustainable free cash flow piece [and] deliver on that. The listing doesn’t fix that.”