Wood Group acquires PSN in £600m deal
14 Dec 10
Oil and gas services consolidation gives Wood extra muscle in brownfield market, as well as a foot in the Caspian
John Wood Group is to purchase its smaller production services rival PSN for just over £600m, in a deal which strengthens the company’s position as a provider of support for brownfield oil and gas production. The group estimates this global market is worth around £50bn a year in total, with the combined brownfield operations of both companies bringing expected to bring in £3bn a year. Crucially though, the acquisition will give Wood Group a presence is Russia and the Caspian sea.
Under the deal, Wood Group will pay £394m for PSN’s equity and assume £206m of its debt, with institutional shareholders receiving £236m cash and employee shareholders receiving a mix of cash and Wood Group shares.
Alec Carstairs, oil & gas transactions senior partner for Ernst & Young, which represented PSN, said: “It is a landmark day, not only for Aberdeen, but for the entire UK oil services industry. The deal struck between Wood Group and PSN coupled with General Electric’s £800m takeover of Wellstream highlights the buoyancy of the oil & gas mergers and acquisitions market.
“Our recent Capital Confidence Barometer saw nearly half of oil & gas respondents say they were actively looking at growth through M&A while 70% stated they expected to execute a transaction within the next two years.
“Take into consideration the corporate buyers and private equity players, both of which are sitting on cash reserves and their steady return to the acquisition trail and we can look forward to further increases in deals activity as more opportunities to invest present themselves.”
PSN chief executive Bob Keiller will join Wood Group ashead the combined brownfields operation when the deal concludes in Spring 2011.