Worleyparsons said it had received a “confidential, highly conditional” proposal for all its shares in November. Photo: James AlcockShares in WorleyParsons surged to a two-year high after a Dubai-based consulting group emerged with a 13.35 per cent holding and confirmed it had made an indicative bid for the engineering contractor last year but was knocked back.
WorleyParsons confirmed on Tuesday it had received a “confidential, highly conditional indicative proposal” on November 14 from Dar Al-Handasah Consultants Shair and Partners (Dar Group) to buy all its shares for $11.80 each.
But after reviewing the proposed scheme of arrangement with its advisors, the board came to the view that it materially undervalued the company and wasn’t in the best interests of shareholders.
“The proposal was highly conditional in relation to financing, due diligence, process, regulatory and other conditions, which created significant execution risk and uncertainty for the company,” WorleyParsons said in a statement.
“The board’s view on value took into account the quality and global platform of the WorleyParsons business, the current low point in oil industry activity, the historical trajectory of previous cyclical recoveries, the cost reduction program that had not yet been fully reflected in earnings and the low operating risk profile of thr WorleyParsons business.”
Dar Group, a privately owned global network of architecture and engineering firms, said its exposure to WorleyParsons comprised of physical shares of 8.61 per cent and a cash-settled equity swap exposure of 4.74 per cent.
WorleyParsons’ shares closed 31.97 per cent higher at $10.65 on Tuesday.
It had bought the stake with a “long-term strategic perspective” and looked forward to being a “supportive shareholder”.
There had been no further discussions between Dar Group and WorleyParsons since the latter rebuffed its proposal in November and Dar Group had “no present intention of initiating discussions with WorleyParsons [over] a change of control transaction”.
The company last week posted a $2.4 million interim net loss – its first ever – due to declining sales, restructuring charges and late-paying government clients, sending its shares on their biggest decline in nine months.
Revenue fell to $2.7 billion from $4.2 billion, a result chief executive Andrew Wood said was “in line with market conditions and comparable with our peers in our market sectors”. It said the full impact of cost reductions and improving market conditions were not reflected in current earnings.
‘s mining contractors have been hit by a downturn in the prices of iron ore and other major commodities which has seen major resources firms curb spending.