Review deals latest blow to Sidara’s takeover of John Wood

• Setback to Sidara bid for John Wood
• Review shows Wood’s finance issues
• Adjustments to statements incoming

UAE construction consultancy Sidara is facing another setback in its planned takeover of British oil services firm John Wood Group, which this week said it had to restate its financial results and probably suspend its shares after a review found information had been withheld from auditors.

Dubai-based Sidara, formerly Dar Global, was in discussions last year over a potential $1.6 billion acquisition of London-listed Wood, but walked away in August citing “geopolitical risks and market uncertainty”.

It made a fresh approach for Wood last month and is said to be looking to buy the firm at a substantial discount to its 2024 bid.

Wood has been struggling with high debt and worsening performance and has issued a series of profit warnings. It appointed Deloitte in November to conduct an independent review of its operations.

The review identified “material weaknesses and failures in the group’s financial culture” within the projects division and in engagement between the unit and group finance, Wood said in a statement on Monday.

Wood, which employs 35,000 people, said “material” adjustments were expected to its income statements and balance sheet for the past three financial years and its 2024 results due on April 30 would likely be delayed. 

The company said it would suspend its shares from that date if more work was needed to complete the accounts.

Its shares were down 25 percent on Monday morning after initially plummeting 36 percent, and are down by more than 75 percent over the past year and 84 percent over the last five years. 

The takeover talks with Sidara have already been extended to allow completion of final accounts to help inform Sidara’s bid. The Dubai company now has until April 17 to make a firm offer or walk away. 

The latest developments may further complicate efforts to reach a deal and it is understood the deadline could be extended again. Sidara declined to comment when approached by AGBI. 

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According to Wood’s statement, Deloitte’s review found there had been “inappropriate management pressure and override to maintain previously reported positions, including through unsupported dispensations, and over-optimism and/or lack of evidence in respect of accounting judgements.”

The statement added: “The cultural failings appear to have led to instances of information being inappropriately withheld from, and unreliable information being provided to, Wood’s auditors.” 

Wood’s chief financial officer stepped down in February after admitting to overstating his accounting qualifications. 

Sidara was founded in Beirut as Dar Al Handasah and is now a network of engineering and building consultancy services.