John Wood Group PLC ('Wood Group', the 'Group') Announces Disposal of Well Support Division for $2.8 Billion |
(Archive News Story - Products mentioned in this Archive News Story may or may not be available from the manufacturer.)
Wood Group
17420 Katy Frwy.
Houston, TX, 77094
USA
Press release date: February 13, 2011
Return of cash of not less than $1.7 billion
ABERDEEN, United Kingdom, Feb. 13, 2011 - Wood Group, the international energy services company, today announces it has entered into a conditional agreement to sell its Well Support Division to GE for cash consideration of $2.8 billion (the "Disposal"). Following the Disposal, the Board of Directors intends that Wood Group will return cash of not less than $1.7 billion to shareholders (the "Return of Cash").
Highlights:
o The price of $2.8 billion fully recognises the strong performance and future prospects of the Well Support Division. Net proceeds after estimated tax, fees and expenses are $2.6 billion. For the year ended 31 December 2010 the Well Support Division had revenues of $947.1 million, EBITDA of $165.9 million and EBITA of $128.1 million. At 31 December 2010 it had gross assets of $604.7 million.(1)
o The Disposal will accelerate the delivery of value to shareholders and reflects Wood Group's success in building the Well Support Division's differentiation and market position as a leading provider of products and services for drilling and production operations.
o The Disposal of the Well Support Division, together with the recently announced acquisition of PSN, is in line with Wood Group's enhanced strategic focus on its core engineering and operations & maintenance activities in its Engineering & Production Facilities and Gas Turbine Services divisions.
o Conditions in the oil & gas and power markets are anticipated to continue to strengthen and Wood Group will continue to pursue its strategy of targeted geographic expansion and broadening of the service offering through organic and acquisition-led growth.
o Having considered the expected net proceeds from the sale of the Well Support Division, together with the forecast operating cash flow of Wood Group, including associated working capital requirements, the Group's capex profile, nearer term acquisition opportunities and the recently announced acquisition of PSN, the Board intends that Wood Group will return cash to shareholders of not less than $1.7 billion (the "Return of Cash"). Following the Disposal and the Return of Cash, the ratio of illustrative average gross debt to 2010 pro forma EBITDA will be 1.0x. Details regarding the mechanism for the Return of Cash will be announced following the completion of the Disposal.
o The effect of the Disposal of the Well Support Division, together with the Return of Cash, is expected to be significantly earnings per share enhancing immediately following completion.
o The Disposal is conditional, amongst other things, upon obtaining anti-trust clearances and the approval of Wood Group shareholders at a general meeting (the "General Meeting"). The Disposal is targeted for completion by the end of Q2 2011. A circular containing further details of the Disposal, the action recommended to be taken by Wood Group shareholders and setting out the notice of the General Meeting and the resolution required to approve the Disposal will be sent to Wood Group shareholders shortly.
(1) All Well Support figures in this paragraph are based on the estimated unaudited 2010 full year results and the balance sheet position as at 31 December 2010. Gross assets exclude intercompany and cash balances.
Commenting on the Disposal, Allister Langlands, Chief Executive of Wood Group, said:
"The significant investment programme in Well Support over the years and the expertise and dedication of all our people is reflected in the price achieved. I believe that GE will be a good owner of the business and, with its scale and reach, be able to accelerate the future international growth of the business. I want to thank all the Well Support people for their outstanding service to Wood Group over many years, and I wish them every success in the future."
"Our shareholders will benefit from a significant return of cash and we plan to continue to pursue our successful growth strategy of targeted geographic expansion and broadening of the service offering in our core engineering and operations & maintenance activities in oil & gas and power markets."
Claudi Santiago, President and CEO, GE Oil & Gas said:
"With world-class products and people, Wood Group's Well Support division has excellent strategic fit with our business model of high technology engineering, manufacturing and services. The acquisition is another major step forward for GE Oil & Gas in executing our strategy to equip and serve our global oil and gas customers with the mission-critical equipment and solutions required to address their toughest technical challenges and growth objectives."
Enquiries:
There will be a conference call to discuss the Disposal at 9am today. The dial in number is +44 1296 317 500 and the pass code is 163 481. The call will also be available on www.woodgroup.com.
Results for the year ended 31 December 2010 will be announced on 21 February 2011 and a presentation for analysts will be held at 9am at the Lincoln Centre, 18 Lincoln's Inn Fields, London, WC2A 3ED.
Wood Group
Allister Langlands,
Chief Executive
Alan Semple,
Group Finance Director
Nick Gilman,
Group Head of Communications & Investor Relations
Tel: +44 (0)1224 851000
Credit Suisse (Financial Adviser and Corporate Broker)
James Leigh-Pemberton
Greg Weinberger
Tristan Lovegrove
Tel: +44 (0)20 7888 8888
J.P. Morgan Cazenove (Financial Adviser and Corporate Broker)
Michael Wentworth-Stanley
Robert Constant
Tel: +44 (0)20 7588 2828
Brunswick (Public Relations)
Patrick Handley
Nina Coad
Tel: +44 (0)20 7404 5959
SOURCE Wood Group
Web Site: http://www.woodgroup.com
|
|
|
|
|
|
|
|
|
|
|
