John Wood Group PLC announced on Wednesday its plan to divest two non-core businesses in separate transactions totaling £165 million ($218 million). This strategic move includes the sale of its 51% stake in Ethos Energy Group Ltd. to One Equity Partners LP, a private equity firm led by Davis Polk & Wardwell LLP.

John Wood to Sell Non-Core Businesses : A Significant Stake Sale

The agreement sees John Wood part with its stake in Ethos Energy, a joint venture with Siemens Energy AG. One Equity Partners will also acquire Siemens' portion, marking a significant consolidation of control. While specific financial terms of the deal remain undisclosed, John Wood expects to secure around $95 million in cash from the transaction, anticipated to complete by the end of 2024, pending regulatory approvals.

Additionally, John Wood is poised to receive loan notes worth up to $42 million from this sale. EthosEnergy, which specializes in turbine parts and services for the energy sector, contributed $34 million in earnings to John Wood in 2023.

Sale of Automation Business

In a second transaction, John Wood will sell its automation-focused industrial and process control systems business, CEC Controls Co. Inc., along with its affiliated Mexican entity, for $30 million. This unit, based in Michigan, generated $66 million in revenue and $6 million in adjusted earnings last year. SCIO Automation GmbH, a global player in industrial automation, will acquire the business.

The deal, expected to finalize later in 2024, is subject to necessary approvals. SCIO Automation, headquartered in Germany, specializes in automating production and logistics processes.

Market Reaction and Recent Developments

John Wood, listed on the FTSE 250 index of the London Stock Exchange, recently faced a sharp decline in its share price. This drop followed the withdrawal of a £1.6 billion takeover offer from Engineering consultancy Sidara. The bid was retracted due to “geopolitical risks and financial market uncertainty” after Sidara completed its due diligence on August 2.

John Wood to Sell Non-Core Businesses : Legal and Advisory Teams

Davis Polk & Wardwell LLP is representing One Equity Partners in the Ethos Energy deal, while SCIO Automation will handle the acquisition of CEC Controls. The legal complexities of these transactions underscore the high stakes involved as John Wood repositions its portfolio.