Intertek, the product testing and quality inspection company, has become the third FTSE 100 firm to be taken private this year, following fund manager Schroders and specialist insurer Beazley. The £10bn takeover by a consortium led by Swedish private equity firm EQT highlights a troubling trend for the London stock market: a steady stream of departures with few new listings to replace them.
Inevitable Outcome
The deal, recommended by Intertek's board after a fourth offer, seemed almost predestined from the moment EQT first approached in April. Initial bids were dismissed as derisory, but as expected, the price gradually rose from £51.50 per share to £60, a level analysts had predicted would be hard to resist. The board's capitulation, while rational, underscores the difficulty of fending off determined private equity suitors in today's market.
Rational Capitulation
Intertek's board briefly considered an alternative strategy of breaking up the company and listing its consumer-related operations in the US. However, CEO André Lacroix would have been better off pursuing such ideas years ago, before a bidder emerged. With activists on the register, shareholders preferred the certainty of cash at a 60% premium to the pre-bid share price. While some UK boards have resisted private equity—such as Bodycote recently—such cases remain rare.
Broader Market Concerns
Intertek is the third FTSE 100 company to be taken out this year. Schroders was acquired by Chicago-based Nuveen, and Beazley by Zurich Insurance. Next in line could be energy and services company DCC, which is at the "minded to recommend" stage with KKR and Energy Capital Partners. While takeovers are a normal part of market dynamics, the lack of new arrivals is alarming. So far this year, only three companies have floated on London's main market, none large enough to join the FTSE 100.
More depressingly, Derby-based engineering firm Doncasters, founded in 1778, is opting to list in the US, seeking a valuation above $4bn. This represents a significant loss for London, as it challenges the assumption that UK aerospace component makers would naturally choose London as their home. Brokers claim the pipeline of potential new listings is improving, but the perception of London as an undervalued market ripe for private equity hunting persists. A major, high-profile new listing is desperately needed to reverse the trend.
