A Tale Of Two Events
Updated thoughts on OCI and Wood Group Plc
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A little bit later than planned following last Tuesday’s update on various Model Portfolio names, in this issue of the newsletter I provide an update on OCI following last Monday’s announcement that it has agreed to sell its Texas Blue Clean Ammonia project to Woodside Energy (WDS) for $2.35bn (or ~39% of OCI’s market cap as at the time of writing / ~€10.20/share).
Given the significance of this event to the OCI investment thesis, I felt a standalone piece was warranted. However, I feel it would be remiss of me not to also address the latest events at Wood Group Plc (WG), which also announced last Monday (quite an eventful day!) that Sidara had walked from its proposed takeover of the company.
An immediate sense of déjà vu hit me as I read the WG news, and my immediate reaction could perhaps best be summed up by the “oof” meme of former Spanish football coach Vicente del Bosque as I watched WG’s stock decline ~37%:
Events such as this always prompt me to question (or least re-examine) a thesis, and as before I’m not that concerned by the Sidara deal breaking, having not been that enthused about it to begin with. As I discuss again below, I still believe WG shareholders will see a better return than the 52% bid premium offered by Sidara on a successful turnaround of the business in due course.
But first, let’s examine the implications for OCI of its latest divestment as part of management’s break-up strategy…