Intertek is the third FTSE 100 company to be taken out this year, as well as fund manager Schroders and Beazley, the specialist insurer. Photograph: Timon Schneider/AlamyIntertek is the third FTSE 100 company to be taken out this year, as well as fund manager Schroders and Beazley, the specialist insurer. Photograph: Timon Schneider/AlamyAnother FTSE 100 firm falls to private equity. Where are the new listings?Nils Pratley
You can’t complain Intertek’s £10bn takeover happened – the problem is the lack of arrivals in the other direction
It would be a stretch to describe the £10bn-ish takeover of Intertek as a landmark event for the London stock market or the FTSE 100 index.
This is not an Arm Holdings moment – the purchase of that Cambridge chip designer by Japan’s SoftBank in 2016 provoked long (and continuing) agonising over the lack of whizzy tech stocks on the London market.
Intertek operates in the duller world of product testing and quality inspection, so there was little wailing when the directors on Thursday did what they had signalled they would do a few weeks ago and recommended the fourth offer from a consortium led by the Swedish private equity firm EQT.
But the ordinariness is still depressing for several reasons. The first is the sense of inevitability. As soon as EQT banged on the door in April, one knew how this tale was likely to go. The defending board would call the bidder’s opening offers derisory (which they were) and then the real haggling would begin. So it has proved. The bids progressed in stages from £51.50 a share to £60, the level City analysts predicted at the outset would be hard to resist.
Second, the Intertek board’s capitulation is probably rational. There was a brief mention of an alternative go-it-alone strategy of a breakup, and a listing on the consumer-related operations in the US. But Intertek’s chief executive, André Lacroix, would have been better to raise such ideas two years ago, rather than when a bidder was prowling.
In today’s circumstances, shareholders, especially the activists on the register, were always likely to prefer the certainty of hard cash at a 60% premium to the share price before EQT turned up. There are instances of UK boards and shareholders resisting private equity predators – it happened at components business Bodycote recently – but they are rare.
Third, Intertek is the third FTSE 100 company to be taken out this year. Schroders, the fund manager, went to Chicago-based Nuveen. Beazley, the specialist insurer, is being bought by larger Swiss rival Zurich. Those two weren’t private equity deals but the next in line (probably) is – energy and services company DCC is at the “minded to recommend” stage with KKR and Energy Capital Partners.
Takeovers are part of the normal cut-and-thrust of the market so you can’t complain that they happen (and Schroders, as semi-family controlled, was in charge of its own destiny). But you can continue to grumble about the lack of arrivals in the other direction. The sum total of flotations on London’s main market this year is three – none was big enough to make the FTSE 100, of course.
More depressingly, Derby-based UK engineering firm Doncasters, founded in 1778, is listing in the US, presumably because it knows it will be more highly valued there.
That one is a bad miss for London. It is hard to compete with the allure of frothy US tech valuations, but we used to think mid-market UK aerospace component makers would still see London as their natural home. Doncasters, pursuing a $4bn-plus valuation, has challenged even that assumption.
Whistling cheerfully, brokers say the pipeline of potential new arrivals in London is looking fuller. Let’s hope so. For all the multiyear changes to the listing rules – and the advertising campaigns to excite ordinary investors – the impression of London as an undervalued market where savvy private equity funds come to hunt for opportunities is proving hard to shift. A big and buzzy new listing is desperately needed.
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