Wood to Sell Industrial Services Business
Wood has announced the sale of its industrial services business to technical services provider, Kaefer, for an initial cash consideration of around $104 million and a further potential payment of up to approximately $14 million.
The divestment was described as “another important step in Wood’s portfolio rationalization strategy”. It follows the planned sale of the company’s nuclear business, which was announced in August 2019 and is expected to complete in the first quarter of this year. Cash proceeds from the disposals will be used to reduce debt, according to Wood.
Kaefer revealed that plans are in place to merge Kaefer Ltd and Wood’s industrial services business into one company that will operate as Kaefer all over the UK and Ireland.
Wood’s industrial services business employs approximately 2,000 people at 16 locations all over the UK and Ireland, Kaefer highlighted. Kaefer says it currently has 12 office locations across the UK, employing approximately 1,200 people.
“The sale of our industrial services business is the latest divestment aimed at maintaining our strong balance sheet and achieving our target leverage,” David Kemp, Wood’s chief financial officer, said in a company statement.
“As our focus has moved towards building a premium, differentiated and higher-margin business, the industrial services offering is no longer core to our strategy. However, it is an excellent fit with Kaefer who see a clear opportunity to grow the business further and extend its market share across new sectors and geographies,” he added.
Steen E. Hansen, Co-CEO at Kaefer, said, “our clients will continue to receive the same high-quality service they have come to expect plus the extra value offered by both companies working together”.
“Wood’s industrial services business and Kaefer work in different, yet related industries, which is why they complement one another so well,” he added.
Wood’s industrial services business provides integrity and fabric maintenance for assets in the marine, process energy, offshore oil and gas and infrastructure sectors across the UK and Ireland.
In its latest results statement, Wood revealed that better than anticipated cash generation in the second half of last year delivered a reduction in net debt to below $1.5 billion as of December 31, 2019.
Kaefer in the UK serves a vast and growing range of industries with asset integrity services, including access solutions, insulation, inspection and testing, protective coatings and asbestos management, according to the company’s website.
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