Home / Financial News / Rumoured SNC-Lavalin takeover of John Wood Group would be ‘misallocation of capital,’ analyst warns

Rumoured SNC-Lavalin takeover of John Wood Group would be ‘misallocation of capital,’ analyst warns

Financial Times reported Wednesday that according to someone familiar with the companies, SNC-Lavalin was weighing up a bid for Wood Group at up to 3-billion pounds ($6.21 billion), though no formal approach has been made and there is no certainty one ever will be.

MONTREAL – An analyst with Dundee Capital Markets says he hopes rumours are unfounded that SNC-Lavalin Group Inc. is taking into consideration the purchase of John Wood Group PLC, a multinational oil and gas services company headquartered in Aberdeen, U.K. 

Analyst Maxim Sytchev states that even though investing in oil and gas as WTI crude falls below US$30 a barrel is a sound long-term strategy, it’s not just one that will endear SNC investors despite $1.4 billion in cash and also the 407 around the monetization block. 

“Doubling down on energy is not something which shareholders would appreciate,” said Sytchev inside a research note. “We think that investors would view the potential allocation to such a transaction as misallocation of capital.”   

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