The British aerospace firm Meggitt has agreed a £6.3bn takeover deal from US rival Parker Hannifin, in the latest approach for a UK-listed company from an overseas buyer.
The board of Meggitt, the FTSE 250 engineering company that operates in the aerospace, defence and energy markets, has unanimously recommended that shareholders accept the 800p-per-share deal.
The offer is at a 71% premium to Meggitt’s closing share price on Friday. Meggitt’s share price surged 60% to 750p at the start of trading on Monday as investors reacted to the news.
“Meggitt is one of the world’s foremost aerospace, defence and energy businesses, leading the market with a strong portfolio of technology and manufacturing capabilities, and holding a significant amount of intellectual property,” said the Meggitt chairman, Sir Nigel Rudd.
“While Meggitt is currently pursuing a strong, standalone strategy which will deliver value to shareholders over the long term, Parker’s offer provides the opportunity to significantly accelerate and de-risk those plans, while continuing to deliver for shareholders.”
The acquisition of Meggitt, which is a defence supplier to the UK government, will almost double Parker’s aerospace operation. Announcing the deal, Parker noted Meggitt’s “high value” technologies and said the takeover would “enhance the future prospects of the combined group within global aerospace and defence industries”.
As part of the deal Parker, which employs more than 2,100 staff in 18 facilities across the UK, has made a number of legally binding contractual commitments to the government to protect Meggitt’s operations.
These include keeping Meggitt’s headquarters in the UK, maintaining headcount in its research and development, product engineering and manufacturing operations, ensuring most of the company’s board are UK nationals, and increasing research and development expenditure by a fifth over the next five years.
“We are committed to being a responsible steward of Meggitt and are pleased our acquisition has the full support of Meggitt’s board,” said the Parker Hannifin chairman and chief executive, Tom Williams. “We fully understand these responsibilities and are making a number of strong commitments that reflect them. Our own journey over more than 100 years has taught us the importance of a strong culture and reputation.”
Last month, the government announced a review of the proposed purchase of Newport Wafer Fab, the UK’s largest producer of semiconductors, by a Chinese-owned manufacturer.
The government is also scrutinising the takeover of Cambridge-headquartered chip designer Arm by the US chip company Nvidia on national security grounds.
Last month, the defence group Ultra Electronics signalled it was “minded to recommend” a provisional £2.6bn takeover offer from the US private equity-backed company Cobham.