2nd Aug 2021 16:13
(Alliance News) - Meggitt PLC's GBP6.3 billion takeover by Parker-Hannifin Corp will be closely watched by UK Secretary of State for Business, Energy & Industrial Strategy Kwasi Kwarteng, Bloomberg reported on Monday.
Bloomberg reported that UK government ministers may be after more assurances that jobs will be preserved. Cleveland, Ohio-based Parker and aerospace and defence components maker Meggitt agreed to offer legally binding commitments to the UK government as part of the deal.
They include ensuring that a majority of board members are UK nationals and maintaining Meggitt's UK head office and divisions under the name "Parker-Meggitt". They also plan on maintaining headcount levels in the UK, as well as research and development spending.
Meggitt also will continue to comply with and enforce UK government security protocols and allow officials to inspect its premises.
Bloomberg added that a decision to intervene on the acquisition is yet to be made by the UK government.
https://www.bloomberg.com/news/articles/2021-08-02/u-k-government-may-probe-parker-hannifin-deal-to-buy-meggitt?srnd=deals
Under the terms of the deal, Parker will pay 800 pence per share in cash for the FTSE 250 company, a 71% premium to Meggitt's closing price of 469.10p in London on Friday.
Shares in Meggitt jumped 56% to 731.60p in London on Monday morning, valuing the company at GBP5.71 billion.
A US takeover of a UK company in a sensitive industry threatens to be controversial.
Aerospace and defence firm Cobham exited the London Stock Exchange in January 2020, following a contentious acquisition by US private equity company Advent, which raised national security risks. In addition, Nadine Cobham – daughter-in-law of the firm's founder Alan Cobham - at the time hit out at the deal.
The former London listing in July made an offer to acquire FTSE 250-listed Ultra Electronics Holdings PLC. Ultra said it is minded to recommend a GBP35.00-per-share takeover approach from Cobham, which had come knocking several times before. The takeover offer, together with an interim dividend, values Ultra at around GBP2.58 billion.
Separately on Monday, Meggitt reported a 26% year-on-year decline in revenue in the first half of 2021, to GBP680.0 million from GBP916.8 million. It swung to a pretax profit of GBP33.6 million from a loss of GBP368.4 million a year ago, however.
The company maintained its full-year guidance for organic revenue "broadly in line" with 2020, an underlying profit increase, and positive free cash flow.
Meggitt decided not to pay an interim dividend in light of "ongoing market conditions". The company is yet to resume payouts since cancelling the 2019 final dividend, worth 11.95p per share, in March 2020.
By Ivan Edwards; [email protected]; Updated by Eric Cunha; [email protected]
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