The most consequential decision of the Intertek chair’s tenure

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The chair of FTSE 100-listed Intertek, Andrew Martin, is due to step down next week at the company’s annual shareholder meeting.

So what? Before that, he faces the most consequential decision of his tenure. The testing and assurance company he has overseen since 2021 is facing a £9.2 billion take-private bid and demands from activist shareholders to engage with the offer.

If successful, the takeover would see another major UK public company swiped off the London Stock Exchange, at precisely the moment government and City grandees are seeking to revive capital markets. Intertek is one of three companies globally that dominate the business of testing and certification for everything from children’s toys to barrels of crude oil.

Gannets descending. Investors accounting for nearly a tenth of Intertek’s shareholder base are pushing for talks with Swedish private equity giant EQT, which has launched a fourth and “final” offer at £60-a-share for the company. They include:

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  PrimeStone Capital, a London-based activist.

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  Palliser Capital, a firm founded by Elliott Management alumni James Smith, which also has a stake in WHSmith; and

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  Lost Coast Collective, a firm founded by the son of investor Nelson Peltz, which has chosen Intertek for its debut active stake.

Why so much interest? “It’s the deeply discounted valuation the business has got to,” says one Intertek shareholder. “The UK market is very unfashionable at the moment, and the environment is very difficult in terms of particularly domestic investors having disinvested and continuing to disinvest [in listed stocks].”

Break up? Shortly after Peltz bought a slice last year, Intertek’s chief executive of 11 years, André Lacroix, launched a strategic review to explore splitting off its energy and infrastructure division. It is understood the company has received interest from multiple parties. The shareholder said that an offer from EQT that took full account of the “sum of parts”, plus a takeover premium, should in their view “start with a seven” i.e. more than £70-a-share.

…or make up? “The time for resisting EQT and pursuing alternatives is over,” Matt Peltz said in a letter sent to the board and seen by The Observer. He added that the review had provided “scant details thirty days in” and expressed a lack of belief “in the team’s ability to execute”.

A note from PrimeStone went further, suggesting that both Martin and Lacroix, who has made no statements about leaving, should bow out: “We believe the Board and Mr Lacroix have a unique opportunity to cap their tenure by delivering an attractive windfall to shareholders, cementing a positive legacy.”

PrimeStone also took aim at the board’s perceived lack of personal investment in a deal, claiming that seven directors hold less than their annual board fees in Intertek shares. That Martin is due to take a new chair position at SSP Group on 1 June, doesn’t help the optics.

Same old story. EQT, which manages €266 billion in assets, has until Thursday to make a firm offer or walk away. It has previously used a similar playbook to acquire Dechra Pharmaceuticals, another UK listed company, in 2023.

Bleeding out? Against such deep pockets and activist pressure, efforts to keep companies publicly listed in London might seem a Sisyphean task. But the environment could quickly change.

“My gut feeling is [the take-private trend] is going to need to change in the next few years, because private equity need exits. I think they'll need the public markets,” says the Intertek shareholder.

What’s more… Between EQT’s bid, and the desire to bow out having preserved Intertek’s FTSE listing, Martin is probably feeling sandwiched. Then again, that might be a good experience for the incoming chair of a company that owns Upper Crust.

Photograph by Qilai Shen/Bloomberg via Getty Images