Bureau Veritas, a French company specializing in testing and certification services, is in advanced talks to merge with its Swiss rival SGS, potentially creating a €32 billion ($33 billion) giant in the certification industry. This merger could reshape the testing and certification services landscape, particularly in the maritime sector, where both companies have significant operations.
Key Takeaways
Bureau Veritas and SGS are in advanced merger discussions.
The potential deal is valued at approximately €32 billion ($33 billion).
Both companies have a long history and significant global presence in testing and certification.
The merger could create a formidable competitor to existing giants in the industry.
Background of Bureau Veritas and SGS
Founded in 1828, Bureau Veritas has become a leader in testing, inspection, and certification services, employing over 83,000 people across 140 countries. The company provides essential services to various industries, ensuring compliance with regulations and promoting sustainability.
SGS, established in the 19th century, operates similarly, with a workforce of around 99,000 employees. The company is known for its inspection, verification, testing, and certification services, making it a key player in the global market.
Details of the Merger Talks
The discussions between Bureau Veritas and SGS have reached an advanced stage, with an announcement expected in the coming weeks. However, both companies have stated that there is no guarantee that these discussions will lead to a finalized agreement.
Key points regarding the merger include:
Stakeholder Approval: Any transaction would require approval from major shareholders, including Wendel, which holds a 26.5% stake in Bureau Veritas, and Groupe Bruxelles Lambert, which owns 19.1% of SGS.
Government Scrutiny: The French government may also scrutinize the deal, especially since state-owned investment bank Bpifrance acquired a 4% stake in Bureau Veritas last year.
Industry Implications
If the merger proceeds, it would mark a significant consolidation in the testing and certification sector, which has seen little activity in recent years. Analysts suggest that this merger could create substantial synergies, allowing the combined entity to enhance its service offerings and expand its market reach.
The merger would also be the first major consolidation in the maritime classification sector since the merger of Det Norske Veritas and Germanischer Lloyd in 2013, which formed DNV.
Financial Performance
Both companies have been actively pursuing growth through smaller acquisitions and strategic initiatives. Bureau Veritas reported a net profit of €288.3 million in the first half of 2024, with its marine and offshore division showing a 15% year-on-year revenue growth. SGS has also engaged in several small acquisitions recently, indicating a proactive approach to expanding its business portfolio.
Conclusion
The potential merger between Bureau Veritas and SGS represents a pivotal moment in the testing and certification industry. As discussions continue, stakeholders will be closely monitoring the developments, which could lead to the formation of a new powerhouse in the sector, capable of competing with the largest players in the market.
Sources
Bureau Veritas in talks with rival SGS to create €32bn specialist in testing, Financial Times.
Bureau Veritas in merger talks with SGS to create a $33bn certification giant | TradeWinds, TradeWinds.
Class Society Bureau Veritas in Merger Talks With SGS, The Maritime Executive.
Bureau Veritas in merger discussions with Swiss rival – Splash247, Splash247.
