Intertek Makes $730 Million Strategic Buy in Energy

Reuters

British testing firm Intertek (ITRK.L) is buying quality and safety services firm Moody International for $730 million (450 million pound) in cash to expand its offering to the energy industry.

Intertek, which also reported forecast-beating full-year profits up 11%, said the acquisition would drive expansion in two key areas, industry services and system certification.

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"It's about high-single digit (percentage growth); that's our usual growth rate, and we can also have it in the energy sector with the acquisition of Moody," Chief Executive Wolfhart Hauser told Reuters.

"It is an important strategic move for Intertek," said Kevin Lapwood at Seymour Pierce, citing the global reach as a key benefit of the acquisition.

Intertek, which tests a range of products from toys and footwear to computers, said Moody's system certification business would give it a presence in Asia, and the takeover is expected to materially enhance earnings next year, while generating pretax synergies of 6 million pounds by year three.

Shares in Intertek were up 4.53% at 0947 GMT, the highest gainer on the FTSE 100.

Intertek, which operates in over 100 countries and counts as clients the government of Mozambique and companies such as Carrefour (CARR.PA), Gap (NYSE:GPS) and Unilever said adjusted pretax profit for the year to end-December was 211.9 million pounds ($345 million) compared with 191.5 million a year earlier.

The consensus expectation was 209.8 million pounds, according to a poll supplied by the company.

Hauser said the group benefited from a general recovery in the economy in the second half, with rising oil prices prompting greater testing in biofuels, a lift in global trade and a booming commodity sector fuelling more mining exploration.

This growth is expected to continue into 2011, he added.

Operating margins are expected to be flat in 2011, following the acquisition, which has lower margins at present, but will increase in the medium term, Intertek said.

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