Intertek Acquires Moody for £450 Million
March 07, 2011
Summary of the Acquisition
Intertek Group plc ("Intertek" or the "Company"), a leading international provider of quality and safety services, announces that it has entered into a conditional agreement to acquire Moody International ("Moody") for a consideration of US$730 million (£450 million) on a cash-free and debt-free basis (the "Acquisition").
Moody is a leading worldwide provider of quality and safety services to the global energy industry. It also provides systems certification services to the manufacturing, construction and service markets. Moody is headquartered in Haywards Heath, UK, and employs approximately 2,500 people in over 80 offices and 60 countries. Moody is currently owned by companies controlled by Investcorp Securities Limited, and the management of Moody.
Intertek is funding the Acquisition entirely in cash from new and available debt facilities.
Background to and reasons for the Acquisition
Moody will join the Industrial Services division of Intertek. Together Intertek and Moody will have a leading technical services platform in Intertek's sector of the global energy market.
The Acquisition offers significant benefits for and opportunities to the Company, including:
- Becoming a leading provider of quality & safety services for the global energy market
- Creating a global platform for the provision of Industry Services, extending existing EU and North American positions
- Extending the depth of the service portfolio for energy assets, processes and products
- Becoming a global player in systems certification
- Increasing revenue diversification for Intertek
- Pre-tax cost synergies rising to approximately £6 million are expected to be achieved by the third full year of ownership
Further information on Moody and the transaction
The value of Moody's gross assets which are the subject of the Acquisition was US$330 million as at 31 December 2009, the latest date at which audited consolidated accounts are available for Moody. For the year ended 31 December 2009 Moody generated revenue of US$457 million, operating profit before the deduction of goodwill amortisation ("EBITA") of US$66 million and profit before tax of US$49 million. (1)
Moody's unaudited management accounts for the year ended 31 December 2010 show revenue of US$476 million and EBITA of US$54 million.
The consideration of approximately US$730 million represents a multiple of 11.1x 2009 EBITA and 13.4x 2010 EBITA.
The Acquisition, excluding reorganisation and associated costs, is expected to be earnings enhancing for the Company in the current financial year and is expected to be materially earnings enhancing next year.
The Acquisition is conditional upon competition clearances in certain countries. It is anticipated that the necessary clearances will be obtained by the end of April and the transaction will complete immediately after.
Brendan Connolly, Moody's Chief Executive Officer, will remain as part of the management team going forward.
Wolfhart Hauser, Chief Executive Officer of Intertek, commented:
"Today's announcement marks an important stage in the ongoing development of Intertek.
Moody operates in one of our core industries, the global energy market, which is set for strong long term growth. Moody is a successful company with a well regarded management team.
The combination of Moody and Intertek provides a platform for the enlarged group to further develop its service offerings and network within the oil and gas industries specifically, but also to the wider energy and industrial markets. Intertek will now have a leading position in providing quality and safety services to the assets, processes and products for the energy market.
The good match between the geographic exposure of the two businesses gives Intertek scale in new countries and the enlarged group a greater presence in the fastest growing regions of the world.
We are also pleased to be merging our systems certification business with that of Moody. The businesses are strongly complementary with good geographic and customer fit and this will make Intertek a significant player in this industry."
Brendan Connolly, Chief Executive Officer of Moody, commented:
"Moody and Intertek are a perfect fit. We can offer our world class technical inspection, consultancy and training services to Intertek's clients and we will benefit from the Intertek expertise in providing quality and safety services to existing, and often ageing, energy assets.
By combining these two businesses, we will ensure that the enlarged group takes a leading position in the global energy market. The fit of our businesses also applies to the merger of our two strong systems certification platforms. Overall, this is a compelling combination."
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(1) 2009 numbers are sourced from consolidation schedules to audited Moody accounts
Any statements made in this announcement that are not based on current or historical facts are forward-looking in nature. These forward looking statements speak only as at the date of this announcement. The Company and other members of the Group expressly disclaim any obligations or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any changes in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
This announcement is not intended to, and does not, constitute or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities.
Intertek is a leading provider of quality and safety solutions serving a wide range of industries around the world.
From auditing and inspection, to testing, quality assurance and certification, Intertek people are dedicated to adding value to customers' products and processes, supporting their success in the global marketplace.
Intertek has the expertise, resources and global reach to support its customers through its network of more than 27,000 people in over 1,000 laboratories and offices in more than 100 countries around the world.
Rothschild which is authorised by the Financial Services Authority, is acting exclusively for Intertek in connection with the Acquisition, and will not be responsible to any other person other than Intertek for providing the protections afforded to clients of Rothschild or for providing advice in relation to the Acquisition.
Neither the content of Intertek's website nor any website accessible by hyperlinks on Intertek's website is incorporated in or forms part of this announcement.
Nothing in this announcement is intended or is to be construed as a profit forecast or to be interpreted to mean that earnings per Intertek share for the current or future financial years, or those of the enlarged group, will necessarily match or exceed the historical published earnings per Intertek share.
This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Group's financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to the Group's products and services), and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Group's control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. Among the important factors that could cause the Group's actual results, performance or achievements to differ materially from those in forward-looking statements include those relating to Intertek's funding requirements, regulatory approvals, clinical trials, reliance on third parties, intellectual property, key personnel and other factors. These forward-looking statements speak only as at the date of this announcement. The Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained in this announcement to reflect any change in the Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors, readers are cautioned not to rely on any forward-looking statement.