Industry braced for £10bn sell-off
MEGGITT & ULTRA ELECTRONICS IN TAKEOVERS
THE UK aerospace and defence industry is bracing itself for a combined £10billion selloff as manufacturers Meggitt and Ultra Electronics agree to US takeovers.
The board at FTSE 250 firm Meggitt, which makes wheels and brakes for fighter jets, yesterday formally recommended a £6.3billion takeover from US rival ParkerHannifin, despite a higher rival bid.
Ultra Electronics, which supported coalition forces in Afghanistan, has agreed the terms of an all-cash £2.57billion offer from Cobham.
Last year, defence firm Cobham was itself bought by US private equity firm Advent International for £4billion.
Richard Hunter, head of markets at Interactive Investor, said Meggitt is recommending the Parker-Hannifin offer at 800p per share, despite US aerospace engineer TransDigm offering 900p, valuing the firm at £7billion. Meggitt favours the Parker-Hannifin deal because it pledges not to close its Coventry HQ and break up the company. Hunter said TransDigm could still make a revised bid including these safeguards. “This is not yet a done deal,” he said. Freetrade analyst David Kimberley said the Ultra takeover is another example of how the UK’s industrial strategy is floundering. He said: “There seems to be no vision or idea as to what industries we want to protect and develop moving forward.” He said the US, China and Israel have taken steps to protect and nurture strategically important sectors. “Why the UK is happy to green light the sale of its existing assets is mind-boggling,” he added. Kimberley said: “As a result, you can almost guarantee the Ultra deal will be completed and that Advent won’t keep any of the promises... just as it didn’t when it acquired Cobham.”