Intertek to bow to pressure on £10bn private equity takeover
FTSE 100 giant Intertek is poised to accept a £10bn takeover offer from a Swedish private equity firm after months of uncertainty, in what would be a huge blow to the London Stock Exchange.
The testing and quality assurance firm said on Wednesday morning that it “would be minded” to recommend the latest offer from EQT – a Swedish buyout firm – to its shareholders, sending shares soaring by seven per cent.
This £10.6bn offer is the fourth to be tabled by the Swedish firm in recent months, in a long courting process which saw activist investors call the company’s leadership into question.
Intertek provides testing and assurance services for companies from around the world and commands a market value of around £7.8bn.
Intertek ‘minded’ to accept offer
The new deal proposes £60 cash per share, valuing Intertek at £10.6bn including debt, and follows previous offers of £51, £54 and £58 per share which the firm said “significantly” undervalued the company.
“The Board of Intertek has agreed to provide EQT with access to confirmatory due diligence on a customary basis to facilitate the announcement of a firm intention to make an offer,” the firm said.
Intertek had previously announced intentions, following a strategic review, to spin off its energy and infrastructure division, and the potential added value of this demerger proved a sticking point in EQT’s previous offers.
Two leading investors in Intertek, Evenlode Investment and Marathon Asset Management, had opposed previous offers, claiming their price tags failed to recognise the value that would be unlocked by this spin-off.
Investors ramped up pressure on board
But other funds had ramped up pressure on Intertek to engage with EQT at the start of this week.
Primestone, a fund which owns around 0.5 per cent of the firm, wrote to the board to urge it to deliver an “attractive windfall to shareholders” and “cement a positive legacy” by opening negotiations with the Swedish buyout firm.
The fund said it is concerned about Intertek’s “fragile” governance: “We are troubled by the concentration of influence at the executive level, precisely at the moment when independent Board oversight matters most.”
On Tuesday, the son of billionaire activist investor Nelson Peltz wrote to Intertek’s board, saying the market was “skeptical” about whether it was capable of lifting the firm “out of the hole it finds itself in”.
Matt Peltz, whose Lost Coast Collective recently built up an £88m stake in the firm, said: “The market has spoken. This management team and Board have had their chance – over the last 11 years and during the last month.
“It is time to recognize the merits of EQT’s proposal and engage in good faith to complete a transaction,” he said.
Intertek’s shares jumped by seven per cent on Wednesday’s early trading, to 5,670p, leaving the stock up 24 per cent in the year to date.