Confirmation of a fourth cash offer proposal from Apollo Global Management (NYSE:APO) for Wood Group (John) PLC (LSE:WG.) suggests serious intent by the acquirer, according to Jefferies.
The broker also detected a “softening of language” in Wood’s response, suggesting the parties are closer in terms of value expectation.
Jefferies noted the latest offer of 237p per share is 85% above the lows Wood Group slipped to in December after its Capital Market Day.
It has lowered its upside price target to 245p from 290p based on a scenario of a further 3% offer increase and including a view “that we see little risk of a counter bid from a new 3rd party”.
The broker has a downside price target of 155p and with the price target spread risk reward more skewed to the downside now and with a 22 March takeover code deadline on intentions, has moved its rating to 'hold' from 'buy'.
On Tuesday, Wood Group rejected a fourth bid approach from Apollo which valued the FTSE 250-listed firm at 237p per share, a 7p premium to the third and most recent attempt by Apollo to win over the company.
On 22 February, Wood Group announced it had unanimously rejected three unsolicited proposals from Apollo.
Shares in Wood Group fell 0.3% to 217.20p in London on Wednesday.