UK's Intertek Rejects Private Equity EQT's Buyout Proposal

UK's Intertek rejects $11 billion buyout proposal from EQT

Intertek's Response and Market Impact

By Prerna Bedi and Yamini Kalia

Details of the EQT Buyout Proposal

April 16 (Reuters) - Intertek has rejected a buyout proposal from Swedish private equity firm EQT AB valuing the group at about 7.93 billion pounds ($10.74 billion), saying it undervalued the British product testing company.  

EQT offered to buy Intertek for 51.5 pounds per share, a 36.6% premium to its April 9 closing price, the day before the bid was made.

Market Reaction to the Proposal

Shares in the London-listed firm, which helps companies ensure their products, operations, and supply chains meet quality, safety and sustainability standards, jumped as much as 14% to 49.58 pounds on Thursday. 

EQT disclosed its interest just before Intertek's announcement, and said it was considering its options after its bid was rebuffed on Monday. 

Intertek's Strategic Moves

Plans for Business Separation

Intertek on Tuesday laid out plans to explore a separation of its two businesses in a bid to boost growth and maximise shareholder returns. 

Analyst Perspectives

"We believe that other possible bidders may emerge, from trade and private equity," Panmure Liberum analyst Joe Brent said in a note. "The potential bid may have increased the urgency of the de-merger announcement, which provides an alternative route to value creation."

Historical Share Performance

At its peak in October 2020, Intertek's shares were trading at 64.92 pounds.

Industry and Market Context

Peer Performance and Sector Trends

Shares of peer Bureau Veritas rose by as much as 3.6% on Thursday, as EQT's interest in Intertek became clear. Testing and certification firms have gained traction in recent years helped by a rise in interest around topics such as quality and sustainability.  

Private Equity Interest in UK Firms

EQT's bid also marks the latest play by a private equity group for a British firm, as relatively lower valuations have made them attractive buyout targets. Aero parts supplier Senior earlier this month agreed to a $1.9 billion takeover from U.S.-based Tinicum. 

Intertek's Financial Performance

Intertek, which appointed a new chief financial officer last month, on Tuesday reported a 5.4% increase in like-for-like revenue in the first quarter, and reaffirmed its forecasts for mid-single-digit growth this year. 

($1 = 0.7387 pounds)

(Reporting by Prerna Bedi in Bengaluru; Additional reporting by Yamini Kalia; Writing by Pushkala Aripaka; Editing by Sahal Muhammed, Kirsten Donovan)