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FTSE 250 engineering services firm John Wood Group should either move its listing to the United States or consider going private, activist investor Sparta Capital Management said on Tuesday.
The call comes a year after the collapse of a £1.7bn takeover of Wood from buyout group Apollo. Wood's shares have fallen by a third, to an all-time low, since Apollo pulled out of a 240p-a-share cash offer last April, but rose 1 per cent in early trading on Tuesday to 142p after the Sparta speech.
Frank Tuell, who founded Sparta in 2021, said in a letter to Wood's board that he was “frustrated by the continued underperformance of the stock.”
Tuel, a former senior portfolio manager at hedge fund Elliott, added: “If UK public markets are unwilling or unable to engage with Wood’s story, we believe you should conduct a strategic review and actively look for alternative solutions.”
He said there had been successful attempts to move initial listings to more suitable locations, and said the US “seems like a potential logical place for listing”. He also said there has been an uptick in M&A activity this year, and that financing markets “appear supportive of public and private deals.”
While at Elliott, one of the most famous activist hedge funds in the world, Tuel was involved in 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 firm in the energy and materials sectors. It rejected several offers from Apollo last year, saying they undervalued its future prospects, and instead committed to a three-year turnaround plan.
Sparta noted that the plan has been successful so far, with EBITDA growing “about 11 percent” in the first full year since the upgrade, and margins are now expected to “expand significantly.” But she said Wood's share price was suffering under the “UK midcap curse”.
British stocks have struggled to keep up with the valuations of their US counterparts, causing frustration among executives and investors. Former Shell boss Ben van Beurden told the Financial Times this month that the oil major was “significantly undervalued” in London and could benefit from a US listing.
Wood declined to comment.
“There has been a lot of buzz about listing in the US, but it is not a silver bullet. The focus now is on implementing the three-year strategy announced in November 2022,” said a person close to the company.
