Apollo, a private equity firm, is closing in on a £1.6 billion takeover of John Wood Group

John Wood Group, a US-based private equity firm, is about to begin talks with US oil and gas engineering group Apollo for a £1.66billion takeover.

Wood rejected four of Apollo’s proposals but has warmed to the fifth and final one made by this month.

After refusing to engage with the bidding party, the company has written in recent days to ask for assurances about certain fundamental issues, such as the financing of the deal and if there will be any problems with competition.

This correspondence is seen by many as a precursor to full-scale negotiations. Close observers said that it indicated the offer was getting near being acceptable by Wood’s board. The board is chaired oil and gas veteran Roy Franklin.

Losing another major company would raise concerns about the UK’s ability to retain businesses.

Wood’s managers and advisors have been discussing the offer with shareholders in recent days. Franklin is under pressure as the Takeover Panel’s rules require Apollo to make a formal bid or withdraw by Wednesday.

Apollo may request a deadline extension if Wood does not answer his preliminary questions. Apollo’s initial offer was 200p per share while its final offer was 240p.

Wood has 36,000 employees, mostly in the engineering and consulting sectors for energy, minerals and chemicals, and life sciences. Last year, it sold its environmental consultancy division, reducing its net debt by more than $1 billion. Ken Gilmartin, the chief executive of Wood, took over in July 2017. After acquiring rival Amec Foster Wheeler in 2017 for £2.2 billion, it was left with debts and legacy lawsuits. One of these included a $115 million settlement for damages. At the time, shares were worth 760p.