John Wood Group makes major moves with sales of EthosEnergy and CEC Controls

John Wood Group PLC, commonly known as Wood, has unveiled major developments in its strategic portfolio restructuring efforts. The company has signed agreements to sell two of its non-core businesses—EthosEnergy Group Limited and CEC Controls Company Inc. These transactions are projected to generate around $165 million in net proceeds during 2024, including loan notes valued at up to $42 million.

EthosEnergy Sale: Key Details and Financial Impact

Wood has secured a deal to divest its 51% stake in EthosEnergy, a joint venture specializing in rotating equipment. The buyer is One Equity Partners L.P., a private equity firm. This transaction, pending antitrust and regulatory approvals along with other standard closing conditions, is set to conclude by the end of 2024. The financial arrangement includes loan notes worth up to $42 million, which will be repayable approximately five years after the deal’s completion, plus accrued interest.

Upon completion, Wood anticipates receiving approximately $95 million in net cash proceeds. EthosEnergy, which employs around 3,600 staff globally and contributed $34 million to Wood’s adjusted EBITDA in 2023, will transition fully to new ownership. Notably, EthosEnergy was part of Wood’s Investment Services business unit and did not contribute directly to Wood’s revenue figures.

CEC Controls Sale: Strategic Shift and Financial Outcomes

In another significant move, Wood has agreed to sell its equity stake in CEC Controls and its associated entity in Mexico to SCIO Automation Group. The sale price is set at $30 million. SCIO Automation Group, a major player in industrial automation based in Germany, will acquire both the U.S. and Mexican operations of CEC Controls. This transaction is also subject to regulatory approvals and other typical closing conditions, with an expected closure later in 2024.

CEC Controls, headquartered in Michigan, USA, employs around 220 individuals and reported $66 million in revenue along with $6 million in adjusted EBITDA for 2023. Wood expects to realize approximately $29 million in net cash proceeds from this sale, contingent on working capital adjustments.

Strategic Rationale and Future Directions

Jennifer Richmond, Wood’s Chief Strategy Officer, emphasized the strategic importance of these sales: “The disposal of these non-core businesses underscores our commitment to strategic realignment. We are rigorously evaluating Wood’s portfolio to ensure alignment with our strategic priorities. This involves being selective about the markets and capabilities we focus on while simplifying our operations to enhance cash flexibility.”

Richmond further noted that the strategic alignment of these businesses with their new owners is promising. She expressed confidence that both EthosEnergy and CEC Controls will continue to thrive and expand under their new ownership structures.

These transactions are a critical part of Wood’s ongoing efforts to streamline its operations and concentrate on core business areas. By divesting non-essential assets, Wood aims to sharpen its focus, improve operational efficiency, and bolster its financial flexibility as it adapts to the evolving market dynamics.