Aerospace and Defense Update
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British aerospace and defense company Meggitt will be acquired by American competitor Parker Hannifin for £6.3 billion UK listed company From overseas buyers.
Meggitt shareholders will receive 800 pence per share in cash in the agreement transaction, a 71% premium to Friday’s closing price.
Sir Nigel Rudd, Chairman of Meggitt, said: “The Meggitt board believes that Parker will be Meggitt’s responsible steward and unanimously recommends Parker’s proposal.”
This bid is the latest bid from an American buyer for British companies, especially those in the defense sector. Last week, the British government said it might interfere with the US private equity-backed competitor Cobham’s proposal to acquire defense specialty company Ultra Electronics for £2.6 billion, while the FTSE 250 index aerospace and defense group Senior rejected the US investment company’s proposal. Lone Star.
In order to allay potential concerns, Cleveland-based Parker made a series of commitments to the British government, including fulfilling the contract, ensuring that most members of the board of directors are British nationals, and increasing R&D spending in the country by 20 in the next five years. %. It also pledged to protect Meggitt’s work in the UK, where approximately 2,300 employees are employed.
Meggitt’s share price surged nearly 60% to 745 pence on Monday, surpassing the previous record high of just under 700 pence.
Parker specializes in motion and control technology and has been operating in the UK for more than 50 years, providing products for the Ministry of Defense, Rolls Royce, BAE and British Airbus. It has a domestic workforce similar to Meggitt’s in 18 sites.
Parker praised Meggitt’s “high-value” technology and stated that the transaction will “enhance the future prospects of the combined group in the global aerospace and defense industry.”
The acquisition will help to nearly double the size of Parker’s Aerospace Systems division, which accounted for 20% of the group’s $13.7 billion in revenue last year. The rest comes from its diversified industrial business.
Together with Parker’s legally binding commitment, Meggitt’s board supports the proposal because of its significant premium and larger scale.
Parker Chairman and CEO Tom Williams said: “We can better serve our customers through innovation, accelerated R&D, and complementary aerospace and defense technology combinations.”
Meggitt announced a half-year pre-tax profit of 49 million pounds, reversing the loss a year ago, and revenue of 680 million pounds. The company was hit hard by the downturn in the civil aviation industry, but the second quarter showed signs of improvement in the first three months of this year.