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France’s Bureau Veritas broke off merger discussions with FTSE 100 group Intertek in favour of pursuing a €31bn combination with Swiss rival SGS, underscoring the appetite to consolidate in the certification sector.
Bureau Veritas and SGS are in advanced negotiations over a Franco-Swiss tie-up, billed as a merger of equals, people with direct knowledge of the talks told the Financial Times.
But immediately before starting talks with SGS, Bureau Veritas was in long-running merger discussions with Intertek, the people said. A tie-up with Intertek would have positioned the combined company as an Anglo-French champion in the certification sector.
People close to those talks with Intertek, which collapsed in late autumn 2024, said Bureau Veritas’s cornerstone shareholder Wendel, a French investment firm, saw greater potential in a deal with SGS and has encouraged the merger discussions.
Another person said a combination between SGS and Bureau Veritas had less execution risk and that the two continental companies would be a better cultural fit than an Anglo-European merger.
Together, Bureau Veritas and SGS would have about 8 per cent of the growing €160-180bn testing and certification industry, which spans services from food safety inspections to engineering compliance checks on buildings, according to a person close to the negotiations.
The Swiss company, which has a market value of SFr16.1bn (€17.2bn), would in effect be taking over Bureau Veritas, which is worth €13.7bn after its shares rose on reports of the advanced talks. The two companies are hoping to cut more than €400mn in annual costs as part of the deal, one person said.
In contrast, the French company would have been the larger party in a combination with London-listed Intertek, which has a market value of £7.9bn (€9.4bn) and is led by French executive André Lacroix.
Wendel is being advised by boutique firm Zaoui & Co and owns 26.5 per cent of Bureau Veritas but has been looking to sell down its stake. It sold 9 per cent of the company in 2024, including 4 per cent to a fund run by French state investment bank Bpifrance.
Any final agreement is expected to include lock up provisions for key shareholders, said one person close to the talks. Belgian-based investor Groupe Bruxelles Lambert owns 19.1 per cent of SGS.
Bureau Veritas is working with Morgan Stanley, while SGS is being advised by Goldman Sachs and Citigroup.
Intertek, Bureau Veritas, SGS, Wendel and Bpifrance declined to comment.
Markets reacted to the potential deal with scepticism, with the companies’ combined market value falling on news of the talks.
“There are real question marks around the scope for immediate value creation,” said Mark Kelly, of MKP Advisors, who added that the longer-term benefits of a deal would come from improvement in productivity.
“This probably suits both anchor shareholders. Wendel, as sellers, get a smaller stake in a bigger business,” he added.
The details of any deal are expected to attract attention in France, given the stake held by Bpifrance and the fact that Bureau Veritas entered the CAC40 index of French blue-chip companies in December.
The optics of a French industry leader being taken over by a foreign rival, in particular, could create political friction.
The Elysée and finance ministry have been briefed on the negotiations in recent days, as has the prime minister’s office, according to two of the people, while Bpifrance is part of the talks.
The talks between SGS and Bureau Veritas have reminded some advisers following the situation closely of the construction merger of France’s Lafarge and Switzerland’s Holcim in 2014.
That deal was another supposed merger of equals driven by powerful shareholders, but faced a cultural clash between the two companies and failed to deliver on the promise of the tie-up.
