EQT has dug deep enough in $14 bln UK LBO standoff

Intertek

12/05/2026 12:03

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Liam  Proud

LONDON, May 12 (Reuters Breakingviews) - EQT EQTAB.ST could be about to make UK financial history. If successful, the Swedish group's proposed takeover of product-testing company Intertek ITRK.L would be the largest British leveraged buyout since the KKR-led purchase of Alliance Boots in 2007. The only question is whether the Intertek board engages, or instead holds firm and risks a much worse outcome for shareholders.

EQT's latest 60 pounds per share cash offer is 17% above its first approach, made in mid-April. It implies a 38% premium to Intertek's undisturbed trading price on April 15, which was just after the UK group run by André Lacroix announced a possible breakup. The bid values the company at 10.5 billion pounds ($14.2 billion) including debt. That's roughly what analysts think Intertek would be worth if broken up, based on an average of brokers' sum-of-the-parts valuations in recent weeks.

Even using Barclays' bullish "upside" case for a future standalone value of 72.7 pounds per share, which rests on all manner of rosy assumptions, the EQT offer still looks favourable. The upside scenario assumes a de-merger or sale of some assets and a U.S. relisting for the remaining core business at a higher valuation. Two years would seem like a generous timeline for CEO Lacroix to get it all done. Discounted to today at 10%, the present value would be 60 pounds per share. EQT is offering the same, without any execution risk. Little wonder that investors Palliser Capital and PrimeStone Capital have urged Intertek to engage.

Moreover, EQT's returns from the deal seem merely pedestrian, implying that the board has already pushed the bidder to the max. Breakingviews calculations suggested a possible 20% internal rate of return (IRR) at the previous bid price, which is roughly the minimum level that buyout barons tend to target before fees. After Tuesday's bump, the IRR looks more like 19%. It's therefore unlikely EQT could pay more and still make a respectable return.

Intertek's share price betrays some nervousness. The stock is about 14% below the value of EQT's latest bid plus the dividend. That suggests two things. First, investors are worried that Lacroix and the board will continue to hold firm, prompting the Swedish group to walk away. Second, they also think that Intertek's breakup value is well below what EQT is offering. The takeaway is clear: Intertek's resistance so far has helped to draw out a good offer, but continuing to hold firm would amount to value-destroying obstinance.

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CONTEXT NEWS

Swedish buyout firm EQT on May 12 announced a "best and final" cash offer of 60 pounds per share for London-based Intertek. The proposed deal values the testing and inspection company's equity at 9.2 billion pounds ($12.5 billion), and implies an overall purchase price including debt of roughly 10.5 billion pounds.

In response, Intertek said its board was reviewing the proposal with the help of the company's advisers, and that it would make an announcement "in due course".

EQT can now only raise the offer if another bidder emerges, or if Britain's Takeover Panel agrees to make an allowance.

Shares in Intertek rose 5% to 52.50 pounds as of 1017 GMT on May 12.

Intertek's shares are still considerably below the value of EQT's bid https://www.reuters.com/graphics/BRV-BRV/gkplkeddkvb/chart.png

(Editing by Neil Unmack; Production by Shrabani Chakraborty)

((For previous columns by the author, Reuters customers can click on PROUD/liam.proud@thomsonreuters.com))