3i Selling Inspicio for £450 Million

PARIS (Reuters) – French certification company Bureau Veritas (BVI.PA) is to buy British commodities testing and inspection firm Inspectorate for 450 million pounds ($667 million) in a deal it said would boost earnings from this year. The purchase from British-based Inspicio, majority owned by private equity firm 3i Group (III.L), will put Bureau Veritas among the top three companies in a global market worth more than 5 billion euros ($6.2 billion), Bureau Veritas said on Tuesday.

Bureau Veritas helps companies ensure their offices, operations and products meet regulatory standards of quality and health and safety. Its rivals include Swiss group SGS (SGSN.VX) and Britain’s Intertek (ITRK.L).

“Bureau Veritas now attains a critical size in the very promising commodities testing and inspection market,” Chief Executive Frank Piedelievre said in a statement.

“We are extending our business portfolio and bolstering our international network in the U.S. and most emerging economies.”

The CEO has said he wants to pursue acquisitions more aggressively this year, enabling the group to increase its range of services and expand abroad.

Shares in Bureau Veritas rose as much as 3 percent to 46.65 euros, giving it a market value of more than 5 billion euros. The broader French SBF 120 index .SBF120 was 0.4 percent weaker by 0802 GMT, with Bureau Veritas the top gainer.

Inspectorate, which has 150 laboratories in 60 countries and over 7,000 staff, has doubled revenue since 2006 to 246 million pounds in 2009, Bureau Veritas said. The aim was to improve its operating margins of around 10-11 percent to the French group’s level — over 16 percent — in the medium term.

The purchase would boost adjusted net profit by about 3 percent this year and 4 percent next year, excluding synergies, which would be “substantial”, Piedelievre told journalists on a conference call.

Founded in Witham, Britain, in 1885, Inspectorate’s services include inspecting ships, terminals and pipelines for the oil and petrochemicals industry, which provides three-fifths of revenue, as well as analysing metal and mineral composition.

Inspectorate will help Bureau Veritas boost its position in Britain and the United States, as well as in high-growth regions such as Russia, China, India, Latin America and the Middle East, which together contribute about 45 percent of sales.

It will also double its network of laboratories as it expands its testing business.

Bureau Veritas said it would fund the acquisition via existing and newly negotiated credit lines and that net debt would reach around two times earnings before interest, tax, depreciation and amortisation after the deal.

The deal is expected to be completed by September. ($1 = 0.6743 pound = 0.8076 euro)

By James Regan
(Editing by Michael Shields)