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(Sharecast News) - Shares in Intertek Group jumped on Tuesday, after the testing and inspection specialist revealed it was mulling splitting into two businesses.
The blue chip has launched a strategic review to evaluate the creation of two specialist businesses, Intertek Energy & Infrastructure and Intertek Testing & Assurance, either by demerger or a sale.
Chief executive Andre Lacroix said the move could "unleash their full potential and create more value for all".
He continued: "Giving the leading scale positions we have built in our end markets over the years, and the depth and breadth of our industry-leading ATIC [assurance, testing, inspection and certification] offering, we believe that two specialist scale global AITC businesses could be best positioned to accelerate growth and deliver greater value for shareholders.
"This would be supported by a focused specialist portfolio strategy, sharper capital allocation and faster in-market execution."
Intertek Energy & Infrastructure and Intertek Testing & Assurance have respective annual revenues of around 1.6bn and 1.9bn.
The update came as Intertek posted like-for-like revenue growth of 5.4% in the first quarter on a constant currency basis, driven by a strong performance in consumer products and double-digit growth for risk-based assurance solutions in its corporate assurance unit.
Intertek called it a "strong" start to the year, and reiterated full-year guidance for mid-single digit like-for-like revenue growth, "continuous" margin progression and "strong" earnings growth.
At 1140 BST, shares in Intertek were up 12% at 4,292p.
The strategic review is due to be concluded and implemented by the middle of 2027.
Dan Coatsworth, head of markets at AJ Bell, said: "Intertek is involved in multiple industries where it tests whether goods are safe, compliant and reliable. This ranges from verifying the quality of crude oil shipments to checking that electrical goods aren't going to catch on fire.
"Hiving off the energy and infrastructure arm would allow Intertek to have a tighter focus on fewer industries; having a sprawling empire might sound grand, but the modern world has taught businesses that sometimes less is more.
"Intertek trades on a big discount to its two main rivals, and it might have come under pressure from shareholders to find a solution. Demergers can lead to higher valuations but it's not guaranteed."
Intertek also announced on Tuesday that Steve Mogford will succeed Andrew Martin as chairman of the board on 20 May. Martin will retire following the annual general meeting, having served on Intertek's board for nearly 10 years.
Mogford joined the board as an independent non-executive director on 1 January 2025. He is currently senior independent director of QinetiQ and a non-executive director and member of the Audit, Nomination and Remuneration Committees of Costain.
He was chief executive of United Utilities from 2011 until March 2023 and led significant growth during that period, Intertek said.
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