By Nina Kienle

SGS and Bureau Veritas said they ended merger talks that would have created a European safety-testing giant with a combined market value of more than $30 billion.

Switzerland's SGS and France's Bureau Veritas said Monday in separate statements that discussions didn't result in an agreement and have therefore ended.

A potential deal would have ranked among the biggest in Europe in the past twelve months, with SGS valued at 16.11 billion Swiss francs ($17.78 billion) and Bureau Veritas at 13.54 billion euros ($14.23 billion) as of Friday's close.

Both companies provide testing, inspection and certification services to customers ranging from carmakers to food producers and sports venues.

A combined entity would have had annual revenue of more than $13 billion, based on 2023 figures for each company. Analysts at Jefferies said a merged business would be more than three times larger than its closest competitor, Britain's Intertek Group.

The discussions ended despite a strong belief in the value of consolidation in the testing, inspection and certification sector, Bureau Veritas said.

The news comes after the two companies said on Jan. 15 that they were in talks about a potential combination.

Disclosure of the talks got a tepid market response. Shares in SGS fell 6.4% the day the companies said they were in discussions and dropped further since then, while Bureau Veritas's stock rose 2% that day but gave back most of that gain afterwards.

Some analysts said the industry was ripe for consolidation given its fragmented nature and that more deals were likely down the line.

After the end of the talks, SGS and Bureau Veritas said they would continue to focus on their standalone strategies, which seek to drive sales growth and higher profitability.

Both SGS and Bureau Veritas have relied on acquisitions to fuel growth, snapping up smaller firms to expand their geographic reach and service offerings. At separate investor events last year, executives at the groups signaled appetite for more deals to deliver growth and boost profitability.

Analysts have said a combined group could have benefited from cost savings and new sales-growth opportunities given their complementary footprints, with Bureau Veritas bringing in marine operations that SGS lacked. An enlarged footprint and strengthened balance sheet could have helped the merged group navigate a digitization shift, according to advisory firm MKP Advisors.

Write to Nina Kienle at nina.kienle@wsj.com

(END) Dow Jones Newswires

January 27, 2025 01:56 ET (06:56 GMT)

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