Britain’s Intertek is ready to recommend a 9.4-billion-pound ($12.7-billion) takeover proposal by Swedish private equity group EQT, the product testing company said on Wednesday, bowing to investor pressure after rejecting three previous bids.
Shares in the company rose as much as 8% to their highest in over four years at 57.2 pounds apiece.
If agreed, the deal would be Britain’s third-largest private equity takeover ever behind the acquisitions of British airports operator BAA Plc in 2006 and pharmacy chain owner Alliance Boots in 2007, according to LSEG data.
Intertek, which in the past month has rejected three offers from EQT on valuation and execution risk grounds, said the fourth and final proposal valuing it at 60 pounds per share in cash was more suitable.
“The board of Intertek considers that the financial terms of the final proposal deliver value in cash to Intertek shareholders at a level which it would be minded to recommend to Intertek shareholders,” it said in a statement.
The company, which was exploring options to break up the company, said it would pause the strategic review to give EQT access to due diligence before it decides whether it wants to confirm its final offer.
The latest bid, which includes an additional 1.1‑pound annual dividend for Intertek shareholders, represents a 40% premium to the stock’s closing price on April 15, the day before EQT made its initial offer.
EQT has until June 11 to make a firm bid or walk away for at least six months under UK takeover rules.
PRESSURE RAMPS UP
Intertek had come under pressure from some investors to engage with EQT, with shareholder Lost Coast Collective, an investment firm founded and run by Nelson Peltz’s son Matthew, saying the market had lost faith in the company’s ability to pursue a standalone strategy.
“It appears that as the offer continued to increase, the pressure ramped up, and management could no longer justify their argument that they could get the same value out of the business, given where it had been trading previously,” Morningstar analyst Ben Slupecki said.
Before EQT made its initial offer on April 16, Intertek’s share price was languishing around 35 pounds apiece, near levels last seen in October 2022 after the company’s annual like-for-like revenue missed expectations on weakness in its energy business.
Source: Reuters.com