Bureau Veritas, the French multinational providing testing, inspection, and certification services, and Switzerland’s SGS, a global leader in the same sector, have entered into merger discussions. If finalized, the deal could form a new testing and certification giant valued at over $30 billion, positioning the combined entity far ahead of its competitors in the market.
The two companies, which play pivotal roles in ensuring the safety, quality, and regulatory compliance of various products, ingredients, and processes, confirmed that they were in talks but refrained from providing further details. Both firms emphasized that there is no guarantee the discussions will lead to a definitive agreement.
Following the announcement, Bureau Veritas' shares surged by as much as 6% in early trading, reaching a record high of 31.54 euros. Conversely, SGS's stock fell approximately 6%, with some analysts suggesting the Swiss company may have been expected to focus more on its internal business improvement strategies.
A potential merger would create an entity considerably larger than current industry rivals, including Intertek of the UK and France’s Eurofins. Bureau Veritas is valued at around 13.23 billion euros ($13.6 billion), while SGS stands at approximately 17.4 billion Swiss francs ($19.1 billion). With nearly 100,000 employees, SGS is the larger of the two, but Bureau Veritas is also a significant player, with 83,000 staff members worldwide.
Given their similar sizes, the merger could be structured as a “merger of equals,” according to Daniel Buerki, an analyst at Zuercher Kantonalbank. “There has never been a transaction of this size in the sector before,” Buerki remarked. “The TIC (testing, inspection and certification) market is not very consolidated, with the four biggest players having a combined market share of 20-25%.”
Both Bureau Veritas and SGS have benefited from the growing global focus on sustainability and the increasing demand for inspection services, including compliance checks for safety and efficiency standards.
Earlier reports from Bloomberg News indicated that the companies were in advanced discussions, and final details of the merger may be announced in the coming weeks.
JP Morgan analyst Sylvia Barker highlighted that the development came as a surprise, particularly as both companies had appointed new chief executives only recently and had outlined fresh strategies just a year ago. “We had expected some longevity to that story,” Barker said. “As such, this development may not be welcome by all SGS shareholders.”
While the talks remain in the early stages, the prospect of the merger is set to shake up the testing and certification industry, leading to greater consolidation in a market that has yet to see such a large-scale transaction.
