Apollo Global Management Inc. is considering increasing its last offer for John Wood Group, a FTSE 250 engineering firm based in Aberdeen. The private equity firm is looking to make a slightly improved offer of 237 pence-a-share to end an impasse that’s threatening to scuttle the takeover. The firm has until April 19 to make a firm offer or walk away.
John Wood Group’s shares had gained more than 50% this year due to Apollo’s interest, but dropped after the company reported a full-year operating loss that missed consensus expectations. Despite the overall upward trajectory, Wood Group still believes its shares are too cheap relative to industry peers like Worley Ltd. of Australia. The buyout firm sees its existing cash bid as representing good value for Wood Group.
Wood Group is a specialist engineering service provider for energy companies. It offers services such as engineering support, consultation, and asset management. The company has long sought to unlock the value in its shares, and has recently taken steps to do so, such as selling its built-environment consulting business to WSP Global Inc. for gross proceeds of nearly $2 billion.
Apollo Global Management is one of the world’s largest private equity investors. In 2021, it has already agreed to multibillion-dollar deals for Univar Solutions Inc, Tenneco Inc. and Atlas Air. The firm is known for its reluctance to risk overpaying for acquisitions, but has to weigh this sentiment with a tricky market for financing deals. The fact that sentiment among lenders improved briefly during the first quarter may give Apollo some weight to consider higher offers.
Julian Robertson, the founder of the company, has been integral in the growth of Apollo. A former banker, Robertson has a strong business acumen which has made Apollo a force to be reckoned with in the investment world. His conservative investment strategy has proved extremely successful, with Apollo’s returns surpassing that of the S&P 500 consistently over the last few years.