Aberdeen-headquartered Wood (LON: WG) has completed the sale of its built environment consulting business to WSP Global.
Regarded as the start of a “new chapter” for Wood, the deal with the Canadian engineering services firm yielded gross proceeds of $1.9 billion, with working capital of $141 million.
It means the energy services giant received gross cash proceeds of $1.8bn for its 7,000-employee strong built environment division.
The money has “immediately” reduced Wood’s net debt, which stood at $1.4bn at the end of December 2021.
Once estimated tax and transaction costs are deduced, net proceeds from the sale are expected to be about $1.67bn.
The estimated tax costs, of around $85m, are to be paid over the next year.
Meanwhile the estimated transaction costs, of about $44m, will be settled paid in this financial year, with roughly $10m already given.
Following the original announcement of the deal in June, Alexandre L’Heureux, chief executive of WSP, said: “The addition of the Built Environment Consulting business will allow us to expand our Earth and Environment leadership across our key markets and geographies.
“We share a common purpose of making the world a better place and our united forces will only further our expertise to create a more sustainable and resilient world.”
Wood confirmed plans earlier this year to sell its built environment business, which accounted for 23% of the company’s overall revenues in 2021.
The division provides consulting and engineering solutions that address environmental risks. increase climate resilience, help to build more sustainable infrastructure and improve mobility.
Former CEO Robin Watson, who announced plans to step down in April, said he wanted the sale of the business to be a “milestone” on which to finish.
Cash from the sale has “restored” Wood’s financial flexibility.
It is “currently exploring” its capital allocation options, with a “particular focus on options that will improve free cash flow generation”.
Ken Gilmartin, Wood’s current chief executive, said: “We are very pleased to have completed the sale of our Built Environment Consulting business to WSP. This transaction marks a new chapter for Wood – the proceeds have transformed our balance sheet and restored financial flexibility to the Group.
“Wood has an exciting future ahead as we capture growth opportunities across the energy and materials markets. We are developing our updated strategy and will outline more details, including our approach to capital allocation, at our capital markets day in November.”