Bureau Veritas

While there is no certainty about the merger actually happening we believe this merger would be interesting from a strategic standpoint.

First, it would create by far the largest company in the sector.

60% of BV reveniues and 70% of SGS come from the same end markets (by type of services). We believe the synergies in revenues would be limited as there would likely be some eviction by clients which would seek to diversify their suppliers.

But, the synergies on the costs are likely to be more significant as there is a significant overlap in revenues and geographies. We notably believe that in a sector where staff shortage is an issue, this will enable to reduce costs but more importantly to potentially secure staff that can be redeployed to meet growing demand.

in all, we like the deal as it is but as always, devil is in the details and we will wait to have the details of the merger before assessing the impact for both companies.

On a stand alone basis, we like Bureau Veritas better than SGS as it offers superior intrinsic value with better Balance Sheet, higher revenue growth and better portfolio and margins.

Of course such a merger would lead to scrutiny by antitrust bodies.