February 6, 2020 @ 16:00 by Richard Dawson
Wood Group Industrial Services, one of the biggest employers in Tyneside, has been sold to a Norwegian firm in a deal worth a reported £90.8 million.
The Gateshead-based company, owned by John Wood Group Plc, has been sold to Norwegian global technical services group Kaefer in a bid to help the group manage pare back its debt and rationalise its portfolio.
The deal is worth around $104 million (£80 million), with a further potential payment of up to $14 million (£10.8 million) to be paid out depending on the achievement of agreed financial goals.
Wood Group Industrial Services currently employs more 1200 people across 12 UK bases, making it one of the last remaining big employers on the Tyne.
The deal will see the business become a wholly owned subsidiary of the group, and all of the firm’s employees will transfer over to Kaefer, which is headquartered in Stavanger, Norway.
It is not yet known exactly how staff will be affected, although Kaefer have issued a ‘welcome to the family’ statement to the newly acquired business and its workforce and offered assurances that clients will continue to receive the same high-quality service.
The deal marks a step change for Wood Group Industrial Services, which was originally founded as Pyeroy in 1973, before its acquisition by Wood Group in July 2013.
The company has painted some of Britain’s best-known bridges and warships, including the Royal Navy’s Astute class submarines, Queen Elizabeth class aircraft carriers, and Tower Bridge in London.
Over the years, the firm has also worked on Shell Northern Systems Plants and other maintenance contracts in the energy and offshore oil and gas sectors.
Wood Group said the divestment is another important step in Wood’s portfolio rationalisation strategy and follows the announcement that it was selling its nuclear business last August.
David Kemp, Wood’s chief financial officer, said: “The sale of our industrial services business is the latest divestment aimed at maintaining our strong balance sheet and achieving our target leverage.
“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.”
Kaefer’s co-CEO, Steen E Hansen, commented: “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.
“These combined capabilities will support our clients’ success and increase our competitive strength.
“We are certain that this is an excellent step towards reaching the goals established in our strategic programme.”