Achi news desk-
Other possibilities highlighted by Sparta include moving Wood’s listing to the US stock exchange in the hope that the company could achieve a wider following.
However, in a brutal assessment of Wood’s position, Sparta suggested that the company may have to be sold to satisfy investors.
“The disconnect between intrinsic value​​​​​​ and market-assigned value has never been wider,” says Sparta.
“We believe it is time to recognize that the next chapter of Wood’s journey may be best supported by different owners, and we encourage you to conduct a strategic review and explore how best to maximize shareholder value, including a sale of the company . ”
Sparta said many other investors felt something had to be done about Wood’s share price. The company’s intervention is putting pressure on Wood’s chief executive, Ken Gilmartin, as he leads a three-year plan to improve the group’s performance.
Wood faced a takeover bid from US investment firm Apollo last year.
Apollo increased the price it was willing to pay to £1.7bn after Wood’s directors said earlier approaches did not value the company. However, he decided to walk away in April last year.
Sparta noted that shares in the company have fallen significantly since then.
“We are now a year into the application process that passed with Apollo and 17 months since you announced your strategy renewal,” Sparta noted in a letter addressed to Wood’s chairman, Roy Franklin.
“Despite the many operational achievements you have recorded since then, your shares are languishing at 130p – 140p, which, with the exception of just one occasion in the last five years, are all-time lows for the shares.”
Sparta’s move may be seen as a concern in Scotland.
Wood became a leading player in the Scottish engineering sector after carving out a role as a provider of support services for the global oil and gas industry.
The group employs around 4,500 people in Aberdeen and its North Sea operations. It has a global workforce of 35,000.
The company has worked hard in recent years to gain work in the new low carbon energy sector.
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Wood did not comment on the letter sent by Sparta, which would need the support of other investors to force changes.
In the letter, Sparta said: “We have spoken to many of your existing investors, and there is broad agreement that something must be done to address the poor share price performance.”
He did not give further details.
Sparta noted that other companies have moved their underlying stock market listing from markets that were determined not to recognize the true value of their businesses.
“In particular, the United States, where peers Wood Jacobs and KBR trade, and where you have a significant operational and operational presence, would appear to be a logical potential listing location,” Sparta said in its letter.
The company also noted that there appears to be plenty of money available for deals involving investors buying companies listed on stock exchanges and taking them private.
He put the onus on Wood’s directors to address the share price issue while noting that UK companies face a “mid-cap curse”. This has resulted in mid-sized operations struggling to attract as much investor attention as larger corporations.
Wood said last month that it had achieved strong growth in the first year of its new strategy. The company grew revenue by 8% to $5.9bn (£4.7bn) last year, from $5.5bn in the previous year.
Separately, Aberdeen-based energy services group Ashtead Technology said yesterday it had increased revenue by 51%, to £110m, last year.
Shares in the company closed up 71p at 687p on the Aim market following a good run.
Shares in Wood closed up 2.1p at 142.5p on the main London market.
