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(Bloomberg) — Palliser Capital has amassed a stake in Intertek Group Plc, the British product-testing company that’s rejected multiple takeover offers from EQT AB, people with knowledge of the matter said.
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The UK activist investor has been building its holding in London-listed Intertek as the company comes under increasing pressure to engage with its private equity suitor, the people said.
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The size of Palliser’s stake and its intentions couldn’t immediately be learned. Representatives for Palliser and Intertek declined to comment.
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Intertek last week rejected a third bid from Swedish private equity firm EQT. The latest offer, at £58 a share, values Intertek at roughly £8.9 billion ($12.1 billion). Bloomberg News reported at the time that some of Intertek’s top investors, including PineStone Asset Management Inc., have been pushing the company to engage with EQT.
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Some of the investors are hoping that EQT will increase its proposal to around £60 per share or more. Intertek would be more willing to engage at a level above £60, people familiar with the matter said previously.
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Shares in Intertek closed at £49.80 in London on Monday, giving the company a market value of about £7.7 billion.
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PrimeStone Capital, which holds 0.5% of Intertek, wrote in a letter to Intertek’s board dated Monday that EQT’s offer does not undervalue the company, which it said has been underperforming peers and major indexes under Chief Executive Officer André Lacroix. PrimeStone said the premium being offered by EQT “far above” the average for UK takeovers in recent years.
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“We are also concerned that this crucial decision point for the board comes at a point where the company’s governance is fragile,” PrimeStone said. With a CEO who’s been in charge for over a decade and a chairman transition about to take place, “we are troubled by the concentration of influence at the executive level, precisely at the moment when independent board oversight matters most,” the firm added.
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Amid the interest from EQT, Intertek is forging ahead with a strategic review that it announced in April. The company said last week that it had already received an “encouraging level of interest” from potential buyers for its Intertek Energy & Infrastructure business.
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Multi-strategy fund Palliser, which was founded by Elliott Investment Management veteran James Smith, has launched a number of new campaigns in recent months. In February, it emerged the firm had taken a stake in Toto Ltd. and is pushing the Japanese smart toilet maker to ramp up promotion of its little-known chip parts business. More recently, Sky News reported that Palliser has built a position in Autotrader Group Plc.
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Morgan Stanley is advising EQT on the deal. Goldman Sachs Group Inc. and JPMorgan Chase & Co. are acting as financial advisers and corporate brokers to Intertek.
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(Adds detail on Palliser founder in penultimate paragraph.)
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