Strategic Shifts in Stake: Ninety One’s Reduced Position in Wood Group Amid Sidara Takeover Speculation

The recent Form 8.3 filing by Ninety One UK Ltd detailing its reduced equity stake in John Wood Group Plc (WOGR:L) has sparked questions about the fund manager’s strategy amid rumors of a potential takeover bid. Combined with Wood Group’s announcement of a possible £0.35-per-share cash offer from engineering firm Sidara, the moves highlight a pivotal moment for investors. Let’s dissect the implications of Ninety One’s actions and the broader market dynamics at play.

The Ninety One Filing: A Strategic Exit or Prudent Risk Management?

According to the April 15, 2025 Form 8.3 disclosure, Ninety One UK Ltd reduced its holdings in Wood Group to 19,335,819 ordinary shares, representing 2.79% of the company’s issued shares. This marks a 1.8% reduction from its previous stake, achieved through three sales totaling 3,678,950 shares between February and April 2025. The sales were executed at an average price of £0.28 per share, well below Sidara’s proposed £0.35 offer.

Crucially, Ninety One retains no voting discretion over 6,582,511 of the remaining shares, indicating a reliance on third-party influence for governance decisions. This lack of control may have accelerated the fund’s decision to reduce exposure to a stock now tied to high-stakes merger negotiations.

The timing of these sales—occurring just days before Wood Group’s April 14 announcement of Sidara’s offer—suggests Ninety One may be hedging against uncertainty. If the deal collapses, Wood Group’s shares could retreat to pre-announcement levels, currently trading near £0.28, while a successful takeover would see the stock rally toward the £0.35 offer price.

The Sidara Offer: A Lifeline or a Gamble?

Sidara’s proposed £0.35-per-share cash offer, paired with a £450 million capital injection, aims to stabilize Wood Group’s liquidity and operational independence. The deal hinges on several conditions, including:
- Completion of Sidara’s due diligence, including an independent audit.
- Publication of Wood Group’s FY2024 audited accounts.
- Unanimous board approval and regulatory sign-offs.

Wood Group’s board has cautiously signaled support for the offer, stating it is the “better refinancing option” compared to alternatives like equity issuance or asset sales. However, the April 17 Rule 2.6 deadline looms large, with Sidara required to confirm or withdraw the bid by then.

Why Ninety One Sold—and What It Means for Investors

The fund’s decision to offload nearly 1.8% of its holdings could stem from two strategic rationales:
1. Preemptive Risk Mitigation: By selling at current prices, Ninety One avoids potential downside if the Sidara deal unravels, securing gains from earlier purchases at lower prices.
2. Opportunistic Profit Taking: The shares were sold at £0.28, below the £0.35 offer, allowing Ninety One to lock in a 25% upside margin if the deal proceeds—a risk-free arbitrage opportunity.

However, the fund’s reduced stake also hints at diminished confidence in Wood Group’s standalone prospects, particularly given its $450 million debt renegotiation challenges. Without Sidara’s support, Wood Group’s liquidity pressures could intensify.

Conclusion: A High-Stakes Crossroads for Wood Group Investors

The Ninety One filing and Sidara offer collectively underscore three critical takeaways for investors:

1. The Clock is Ticking: With Sidara’s April 17 deadline, the market’s patience is finite. A missed deadline could trigger a £0.28-to-£0.35 price drop, punishing shareholders who held out for the premium.

2. Sidara’s Pledge Holds Weight: The engineering firm’s commitment to $450 million in new liquidity and operational autonomy for Wood Group—while retaining its brand—adds credibility to the offer. However, Sidara’s ability to secure regulatory approvals (outside carve-outs) remains unproven.

3. Ninety One’s Exit Signals Caution: By reducing its stake ahead of the announcement, the fund signals that Wood Group’s value hinges entirely on the Sidara deal’s success. If the offer collapses, the stock could languish without a credible alternative plan.

For investors, the April 17 deadline is a binary event. Those betting on the deal’s success might accumulate shares at current levels, targeting a 25% upside, while skeptics should await clarity. Either way, Ninety One’s move serves as a reminder: in merger markets, timing is everything.

Note: This analysis assumes no material changes to Wood Group’s fundamentals or Sidara’s financing capacity between April 14 and 17, 2025.