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French company Bureau Veritas and its Swiss rival SGS are in talks to combine the two companies in a deal that would create a €32bn specialist in testing and certification services for industry.
The negotiations are at an advanced stage, and an agreement could be announced over the coming weeks, although nothing has been finalised and the deal could still fall apart, according to people familiar with the talks.
Any transaction would need the blessing of the Paris-based investment firm Wendel, Bureau Veritas’s biggest shareholder, which has a 26.5 per cent stake.
The deal could prove to be sensitive for the French government, the people familiar with the talks said. State-owned investment bank Bpifrance bought a 4 per cent stake in Bureau Veritas last year.
SGS and Bureau Veritas did not immediately respond to requests for comment. The discussions between the two companies about combining were first reported by Bloomberg.
Bureau Veritas entered the Cac 40 index of French blue-chip companies last month when it replaced Vivendi, Vincent Bolloré’s media conglomerate which split into four and spun off its main businesses.
The company’s shares have gained 12.5 per cent over the past six months to reach a market capitalisation of €13.48bn.
SGS, based in Geneva, gained 13.6 per cent over the same period, giving it a market value of CHF17.56bn.
Founded in 1828, Bureau Veritas provides testing and certification services and has more than 83,000 employees operating in 140 countries around the world. SGS, also founded in the 19th century, has 99,000 employees.
Both companies provide services to industry, such as power utilities, to ensure compliance with regulations including those for building safety.
They also supply sustainability certification: a fast-growing sector as environmental concerns and reporting requirements on environmental, social and governance issues increase.
Bureau Veritas has completed bolt-on deals worth €80mn so far this year, as well as an agreement to sell its food-testing business. In its most recent quarter it upgraded its revenue outlook for 2024.
SGS has also done some small deals, worth CHF70mn, in its latest fiscal year.
However, its shares have underperformed those of Bureau Veritas since the start of 2022.
