19th May 2023 14:54
(Alliance News) - John Wood Group PLC should announce a share buyback programme to reverse its "material undervaluation", a shareholder said on Friday.
Sparta Capital Management Ltd believes its previously proposed buyback would be "highly accretive to the business".
"We can see no obstacle to the board in taking this important step, as soon as possible," Sparta said.
Sparta did not say how much of Wood Group it owns. Bloomberg back in December, citing people familiar with the matter, reported that Sparta is a top-10 shareholder in the Aberdeen-based engineering consulting firm.
John Wood said on Monday that it is "well-placed" to deliver value to shareholders after Apollo Management Holdings LP withdrew its proposal to acquire the firm for 240 pence per share. The offer valued the firm at GBP1.66 billion.
John Wood shares fell 0.9% to 137.70 pence each in London on Friday afternoon, giving it a market capitalisation of GBP952.7 million.
Sparta said instituting a share buyback is "an entirely logical decision," due to Wood's strong business performance, underlying cash flow generation and undervalued shares.
"In our December 2022 letter to Wood, we highlighted that, given the material undervaluation of the shares, the company was vulnerable to an opportunistic takeover approach; subsequent events have clearly vindicated this view. Given that the business prospects have continued to improve, but the share price is the same, we can only conclude that this vulnerability is even greater today," Sparta said.
By Harvey Dorset, Alliance News reporter
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