TIDMITRK
RNS Number : 5142Y
Intertek Group PLC
13 May 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (REGULATION (EU) NO. 596/2014).
INTERTEK TO ACQUIRE SAI GLOBAL ASSURANCE
Intertek expands its global Assurance offering with acquisition
of SAI Global Assurance, a leading provider of assurance services
13 May 2021
Transaction highlights
* A value accretive transaction with excellent
strategic fit
* Scales up Intertek's high growth, high margin and
capital light Business Assurance business, and
significantly increases its presence in complementary
geographic markets, specifically in Australia, the
USA, Canada, the UK and China
* Brings new service capabilities in attractive
end-markets including food, agriculture and Quick
Service Restaurants ("QSR")
* Transaction consideration: A$855m cash and debt free,
financed using new debt facilities
* 2021e (June year-end) revenue of A$240m and adjusted
EBITDA margin of 23%
* Expected to deliver robust organic growth
* Targeting 300bps+ of margin accretion over 3 years
* Expected to be EPS accretive from the first full year
* ROIC/WACC cross-over by year 5
Watch the video to find out more about the acquisition here:
https://www.intertek.com/investors/SAI-Global-Video/
Intertek Group plc ("Intertek" and "Group"), a Total Quality
Assurance provider to a range of industries worldwide, is pleased
to announce that it has entered into an agreement to acquire SAI
Global Assurance, a leading provider of assurance services. SAI
Global Assurance is part of the wider SAI Global Group owned by the
private equity firm Baring Private Equity Asia.
Intertek is a global market leader in Assurance solutions,
enabling clients to identify and mitigate the intrinsic risk in
their operations, supply and distribution chains and quality
management systems. The acquisition of SAI Global Assurance will
further strengthen Intertek's Assurance offering by providing
additional scale, enhanced geographic coverage and new
capabilities. Specifically, we will benefit post acquisition from a
stronger market position in Australia, the USA, Canada, the UK and
China, and an expanded service capability in attractive
end-markets.
SAI Global Assurance utilises its globally recognised brand to
mitigate risks across organisations' processes, operations and
supply chains. It provides Assurance services, including management
systems certification and second party audits across a wide variety
of end-markets to more than 60,000 customers in c.130 countries.
SAI Global Assurance is the market leader in assurance in Australia
and has scale positions in the US, Canada and the UK and a
fast-growing business in China. In addition to management systems
certifications, SAI Global Assurance has a particularly strong
position in the Food, Agriculture and QSR end-markets, as well as a
good presence in environmental & sustainability audits.
Alongside its principal assurance activities, SAI Global
Assurance provides global market access solutions offering more
than 1.5 million technical standards to more than 10,000 customers
in Asia Pacific, Europe and the Americas.
Transaction highlights
- A value accretive transaction with excellent strategic fit
- Highly complementary across multiple regions, adding scale in
attractive growth markets (Australia, USA, Canada, UK and
China)
- Expands Intertek's offering across a number of high-growth,
safety-critical segments including food, agriculture and QSR
- Increases exposure to highly attractive and growing global
ATIC addressable market, where risk-based Quality Assurance
solutions are becoming ever more mission critical for all
stakeholders
- Significant opportunity to drive cost efficiencies from scale
given Intertek's existing global Business Assurance presence
- Brings high quality team, strengthening Intertek's talent pool
Financial highlights
- SAI Global Assurance is expected to record revenues of A$240m
and an adjusted EBITDA margin of 23% in the financial year ending
30 June 2021
- Intertek will acquire SAI Global Assurance for cash
consideration of A$855m on a cash-free and debt-free basis
- Intertek will finance the acquisition using new debt facilities
- Intertek expects the acquisition to deliver attractive returns to shareholders:
o Expected to deliver robust organic growth
o Targeting 300bps + of margin accretion over 3 years
o Expected to be EPS accretive in the first full year after
acquisition
o ROIC/WACC cross-over by year 5
The transaction is subject to customary closing conditions and
is expected to be completed in Q3 2021.
Andre Lacroix, Chief Executive Officer of Intertek,
commented:
"As we emerge from the global COVID-19 pandemic, we expect our
customers to increase their focus on Risk-Based Quality Assurance
to provide the highest quality safety and sustainability products
and services to their customers. The growth of the Assurance,
Testing, Inspection & Certification (ATIC) industry is expected
to accelerate and Assurance, a capital light and high margin
service will be critical to addressing the increased corporate
focus on Total Quality Assurance.
Intertek Total Quality Assurance (TQA) provides a superior
service to our clients through our end-to-end systemic ATIC
solutions. With the acquisition of SAI Global Assurance, we
continue to strengthen our TQA value proposition by scaling up our
Assurance business in complementary geographies such as Australia
and the UK.
SAI Global Assurance is a highly regarded business and brings a
large, diverse, high quality customer base and strong positions in
management systems certification, as well as food/agriculture and
QSR audits. We believe the combined organisation will have an
improved ability to deliver a superior service to customers across
industries and geographies, while benefitting from operational and
cost efficiencies.
We are delighted to welcome SAI Global Assurance and its
management team to Intertek."
The Acquisition constitutes a Class 2 transaction pursuant to
the UK Listing Rules. For the purposes of the LR 10.4.1.R
(Notification of Class 2 transactions), SAI Global Assurance's
revenue and adjusted EBITDA for the year to June 2020 was A$233m(1)
and A$36m(1) respectively. Gross assets at the end of March 2021
were A$433m(1) .
(1) Unaudited financials are pro forma for the divestment of
non-core operations, removal of corporate allocation and
non-transaction perimeter costs, and inclusion of standalone costs
as well as other adjustments.
VIDEO
A video describing how we continue to strengthen our TQA value
proposition by scaling up our Assurance business with the
acquisition of SAI Global Assurance can be viewed at
https://www.intertek.com/investors/SAI-Global-Video/
WEBCAST
A live webcast for analysts and investors will be held today at
8:00am UK time. Details can be found at
http://www.intertek.com/investors/ together with presentation
slides and a pdf copy of this report. A recording of the webcast
will be available later in the day.
CONTACTS
For further information please contact:
Denis Moreau, Investor Relations
Telephone: +44 (0) 20 7396 3415 investor@intertek.com
Jonathon Brill, FTI Consulting
Telephone: +44 (0) 20 3727 1000 intertek@fticonsulting.com
About Intertek
Total Quality. Assured.
Intertek is a leading Total Quality Assurance provider to industries
worldwide.
Our network of more than 1,000 laboratories and offices in more
than 100 countries, delivers innovative and bespoke Assurance,
Testing, Inspection and Certification solutions for our customers'
operations and supply chains.
Intertek Total Quality Assurance expertise, delivered consistently,
with precision, pace and passion, enabling our customers to
power ahead safely.
intertek.com
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