Market reaction
Shares in Intertek Group Plc rose sharply in London trading on Tuesday, increasing by over 5% after Swedish private equity firm EQT AB submitted a fourth and final takeover proposal valuing the testing and inspection company at 9.4 billion pounds. Intertek said it was reviewing the latest approach.
Terms of the proposal
Under the terms presented by EQT, Intertek shareholders would receive 60 pounds per share in cash, with the potential for an additional 1.1-pound dividend relating to fiscal 2025. The cash-and-dividend structure follows three earlier EQT approaches to Intertek shareholders of 51.5, 54, and 58 pounds per share.
The cash-only element of the new proposal represents a 59% premium to where Intertek shares traded before takeover interest first emerged. The offer level remains below the company’s pandemic-era high share price.
Bid rationale, as stated by EQT
EQT said the proposal provides what it called "certain and accelerated cash value at a full valuation for Intertek shareholders, superior to the range of outcomes associated with Intertek’s standalone prospects." The private equity group characterised the bid as an immediate, full-value option for shareholders.
Regulatory timetable and consequences
Under the relevant UK takeover rules, EQT has until Thursday to either make a formal offer or withdraw the approach. If Intertek rejects this final proposal, EQT would be prevented from making another bid for at least six months, except in limited circumstances set out in the takeover code.
Analyst and investor reactions
RBC Capital Markets analysts urged shareholders to consider engaging with the board on the offer. They said: "We believe ITRK investors, some of whom have expressed that any offer would need to start with a ’6’, should encourage the board to seriously engage with EQT." In a separate comment, the analysts described EQT’s bid as striking "a fair balance between compensating ITRK shareholders for future upside potential, and creating a cushion of safety for EQT as it likely plans to prepare ITRK for the next stage on it strategic journey."
Intertek’s stance and ongoing strategic review
Over the past month Intertek has repeatedly rebuffed approaches from EQT, and the company has continued a strategic review that could lead to a split of the business into two parts. Intertek has argued a takeover could present substantial execution risks and has said it has received encouraging interest in its energy and infrastructure division.
Two shareholders, PrimeStone Capital and Palliser, have publicly urged the board to engage with EQT.
What remains uncertain
Key near-term uncertainties include whether Intertek’s board will accept or counter the proposal within the takeover timetable and whether EQT will proceed to a formal offer before the Thursday deadline. If the board declines to engage and the bid is withdrawn, regulation imposes a cooling-off period that would limit EQT’s ability to bid again for at least six months.
Disclosure