Intertek tries to interfere in the discussions between Bureau Veritas and SGS
While negotiations continue between the two certification giants, the British inspection group is pushing to back the French company. As in 2024.
Could the scenario of an XXL merger between the inspection giants Bureau Veritas and SGS be disrupted by a third party? According to our information, one of their competitors, the British Intertek, is trying to interfere in the debates. The latter, which is supported by several advisors, including JP Morgan, is campaigning in favor of a merger with Bureau Veritas, itself assisted by Morgan Stanley while the boutique Zaoui & Co advises its first shareholder, Wendel. Intertek and Bureau Veritas have already very seriously explored this avenue last year, as revealed by the Financial Times. It was after this track was abandoned that the French company was led to explore a deal with SGS (here advised by Goldman Sachs and Citigroup). But, in reality, Intertek has not given up, l’Informé has learned, and is trying to reverse the trend in its favor. “It is not necessarily very smart to try to interfere in a marriage between two players who are talking amicably,” observes a source close to Bureau Veritas.
The scenario of a marriage between Intertek and Bureau Veritas turns out to be significantly different from a union between the latter and SGS. In the first combination, it is the French group that appears as the consolidator: its stock market value amounts to 14 billion euros, while that of its British competitor currently stands at 8 billion. Between Bureau Veritas and SGS, however, the size turns in favor of the Swiss: valued at 17 billion, it would play the role of the absorbing company - in a scheme that could involve a public exchange offer with an acquisition premium as revealed by l'Informé. In this scenario, the center of gravity of the new group would lean more towards Switzerland... While Bureau Veritas has just entered the CAC 40. The specter of the Lafarge-Holcim deal, which, from a marriage between equals ended up leading to a pure and simple absorption of a French flagship by a foreign group, is not very far away.
According to our information, Intertek is trying to plead its case to the State. The British company - whose chairman of the board of directors is a Frenchman, André Lacroix - is particularly targeting Bpifrance. The public investment bank had taken 4.2% of Bureau Veritas' capital in April 2024, at the time when Wendel had chosen to place 9% of the group's capital on the market, thus reducing its stake to 26.5% (and 41% of voting rights). Bpifrance's arrival in the capital took place at a time when negotiations with Intertek had paused. Its stake was acquired through the Lac1 fund, a vehicle set up to stabilize the shareholding of large French groups... and in particular to help them act as a consolidator in their market. This suggests that Bpifrance was indeed aware of the negotiations with Intertek. However, a source close to the public bank informed L'Informé that no contact has been established to date with the British group.
The next fortnight should in any case be decisive for the discussions between Bureau Veritas and SGS. And this is under the watchful eye of the stock market, where SGS shares have eroded by 8% since the talks were made official early on January 15, while Bureau Veritas shares are now up only 1.5% after having risen by 5% in the immediate term. The markets will be particularly attentive to the industrial rationale of a merger, as well as the commercial and cost synergies that they expect to derive from it. They will also have to explain how new savings could be articulated with the slimming cure announced last year by SGS: the group had announced that it wanted to make 100 million Swiss francs (110 million euros) of cuts by the end of 2025. Several sources report 400 to 500 million euros of synergies expected by the parties. For comparison, Bureau Veritas generated revenues of €5.8 billion for adjusted operating profit of €930 million. SGS generated revenues of CHF6.6 billion (€7.1 billion) for profit of CHF971 million (€1 billion).
When contacted, Wendel and Bureau Veritas declined to comment. Intertek had not responded to our requests at the time of publication.