Jefferies downgrades Wood Group to 'hold'

Jefferies stated that confirmation of a fourth cash offer proposal, up 3% on previous offers, suggested "serious intent" by the acquirer, and also pointed to a "softening of language" in the board's response - suggesting the parties were closer in terms of value expectation.

The broker also increased its price target from 190.0p to the latest 237.0p cash offer from Apollo but made no changes to its underlying estimates.

It also reduced its upside price target to 245.0p from 290.0p based on a scenario of a further 3% offer increase and to include a view that it sees "little risk" of a counter bid from a new third party, while its downside price target increased to 155.0p based on the last close price ahead of Wood's confirmation of the initial Apollo proposals.

"Increasing price target to latest 237.0p offer price and reduce upside price to 245.0p (a further +3%) as we discount third party counter offer risk and downgrade to 'hold' with bid premium more than 50% to last pre-bid close of 155.0p," said Jefferies.

"With our price target spread risk reward more skewed to the downside after these updates and a 22 Mar 2023 takeover code deadline on intentions, we downgrade to 'hold'."

Reporting by Iain Gilbert at Sharecast.com