Activist investor calls on Wood Group to consider New York listing

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John Wood Group, the FTSE 250 engineering services company, should either move its listing to the US or consider a possible sale, activist investor Sparta Capital Management said on Tuesday.

The call comes a year after the collapse of a £1.7bn takeover approach for Wood from buyout group Apollo. Wood’s shares have fallen a third, to all-time lows, since Apollo walked away from a 240p-a-share cash bid in April 2023, but rose 1 per cent in early trading on Tuesday to 142p after Sparta’s letter.

Franck Tuil, who founded Sparta in 2021, said in a letter to Wood’s board that he was “frustrated by the continued underperformance of the shares”.

Tuil, a former senior portfolio manager at hedge fund Elliott, added: “If the UK public markets are unwilling or unable to engage in Wood’s story, we believe you should undertake a strategic review and actively seek alternative solutions.”

He said there had been successful attempts to move primary listings to more favourable locations, and the US would “seem a logical potential listing venue”. He also said there had been an uptick in M&A activity this year and that financing markets “appear to be supportive of public to private transactions”.

Tuil added that it was “time to recognise that the next chapter of Wood’s journey could be best supported by different owners”, and urged the group to “explore the best way to maximise shareholder value, including a sale of the company”.

While at Elliott, one of the world’s best-known activist hedge funds, Tuil was involved in its investments in AC Milan, Pernod Ricard and Bayer. His letter was first reported by Sky News.

Founded in 1982 and headquartered in Scotland, Wood is a consulting and engineering company in the energy and material sectors. It rebuffed several bids from Apollo last year, saying they undervalued its future prospects, and instead committed to a three-year turnaround plan.

Sparta noted that the plan had so far been successful, with earnings before interest, taxes, depreciation and amortisation growing “some 11 per cent” in the first full year since the refresh and margins now expected to “expand significantly”. But it said Wood’s share price was struggling under the “UK mid-cap curse”.

UK stocks have struggled to keep up with the valuations of US peers, causing frustration among executives and investors. The former head of Shell, Ben van Beurden, told the Financial Times this month that the oil major was “massively undervalued” in London and could benefit from listing in the US.

Wood declined to comment.

“There has been a lot of popular talk about listing in the US but it is not a silver bullet. The focus right now is on delivering on the three-year strategy announced in November 2022,” said a person close to the company.