A Weak Session With A Bigger Question
The FTSE 100 fell 1.4% on Tuesday, but the larger question for many investors is why UK share prices have not dropped further since the start of the US-Israel war on Iran. The index remains up by a few percentage points since the start of the year, despite the inflationary shock caused by higher energy prices.
That resilience is notable because few investors would have expected the market to hold up so well if they had known that a major energy price shock was ahead. The absence of Iran-related profit warnings has helped, although those often take time to appear in company updates.
Global Earnings Cushion The FTSE
The structure of the FTSE 100 has also provided support. The index includes many companies that earn a large share of their revenue overseas, meaning their performance is often tied more closely to the US and global economy than to the UK domestic market.
That matters because the United States has not faced the same surge in natural gas prices as Europe. At the same time, higher oil prices can support energy majors such as Shell and BP, giving part of the index a direct benefit from the same shock that hurts other sectors.
A Large Cash Bid Changes The Tone
Another reason the market has avoided deeper weakness is the continued appearance of large takeover bids. Swedish private equity firm EQT has made a 10 billion pound approach for Intertek, the product testing and quality inspection company.
EQT’s latest proposal values Intertek at 58 pounds per share, up from earlier offers of 54 pounds and 51.50 pounds. Because the firm has not described the offer as final, there remains a possibility of a further increase before next week’s put up or shut up deadline.
Intertek Is Not An Obvious War Casualty
Intertek’s business is not clearly exposed to disruption around the Strait of Hormuz. Its consumer operations test a wide range of products, including toys, food and electronic equipment, while its energy and infrastructure division performs tasks such as testing oil cargoes for contamination.
That energy and infrastructure exposure may even provide modest support in the current environment, particularly through links to the US market. As a result, the takeover debate is less about immediate geopolitical damage and more about valuation, corporate structure and shareholder returns.
The Breakup Question Becomes Central
The main strategic issue is whether Intertek would be worth more if its two main divisions were separated. The company has already launched a strategic review to explore whether a split could unlock value.
EQT would probably consider a similar path if it gained control. The lower-returning energy and infrastructure business is viewed as a candidate for sale or demerger, while the consumer-related operation could potentially attract a higher valuation if compared with its US rival UL Solutions.
Investors Are Not Rushing To Sell
EQT can argue that its offer represents a 54% premium to Intertek’s share price before takeover interest emerged. In normal conditions, that would be considered a strong proposal. Intertek, however, can point out that its shares traded around 45 pounds in March before weaker growth concerns hit sentiment.
The board’s response to the 58 pound offer is still awaited, but the market price of 50.90 pounds on Tuesday suggests shareholders are not yet convinced that a deal is inevitable. For investors, that is the key signal: even in a volatile market shaped by war and energy risk, expectations for corporate value have not collapsed. A large cash bid at a heavy premium is still being tested, not automatically accepted.
