Minister goes into battle over £6bn defence raid
As ANOTHER British aerospace firm is targeted for takeover
MINISTERS stepped in yesterday to protect jobs and expertise after a major defence firm became the latest UK company to fall prey to a foreign takeover.
Business Secretary Kwasi Kwarteng is seeking guarantees from the American wouldbe buyer of Meggitt that it will keep the firm’s operations in Britain under the proposed £6.3billion deal.
Coventry-based Meggitt traces its history to the 1850s and the invention of the world’s first altitude meter for hot air balloons. It makes vital components for planes and military jets with a 2,000strong UK workforce and is listed on London’s FTSE 250 index.
the US firm behind the takeover, Parker-Hannifin, has put forward a range of pledges in an effort to get the Government’s support, saying they would be legally binding.
these include taking on apprentices, keeping Meggitt’s UK headquarters open and promising to invest more in the company’s research arm.
Parker-Hannifin boss tom Williams insisted his firm has ‘a great deal of respect’ for Meggitt and will be a ‘responsible’ owner. But Mr Kwarteng is said to be taking an ‘active interest’ in the swoop.
As well as asking for more detail, he wants Parker-Hannifin to lay out its long-term plans for the workforce as so far the Ohio-based group has only said jobs in certain divisions will be safe.
the US company has also said it would cut down on the number of suppliers the combined group would use, potentially putting jobs at risk in the supply chain.
It is the second time in days that Mr Kwarteng has signalled he is closely monitoring the sale of a strategic firm. Another FTSE 250 group, Ultra electronics, has been approached by American private equity company Advent International over a £2.6billion takeover.
It comes as British companies which have seen their share prices knocked by the Covid crisis – including the AA and supermarket Morrisons – have been buy-up targets for private equity groups and foreign firms.
there are added fears that deals targeting the UK’s world-leading aerospace and defence industry could affect national security.
Mr Kwarteng has the power to launch a formal ‘intervention’ so the Government can assess if a sale would pose a threat.
the City has become more sceptical after Advent bought Cobham, another key defence group, for £4billion last year. It promised to be a long-term investor but sold the majority of the company within 18 months of the tie-up.
tory MP tobias ellwood, defence committee chairman, said the Government must intervene and launch a full investigation into the Meggitt deal. He added there
has been a ‘one-way ticket’ of important UK firms being snapped up by overseas groups.
tory former defence minister Sir Gerald Howarth added: ‘Parker-Hannifin has been established in the UK for a long time and they have been prepared to give some commitments.
‘I’d like to see some of them be slightly stronger – a number are phrased by “plans to”, “intends to” – and we all know that intentions can change overnight.’
Meggitt, with 9,000 staff globally, makes parts for the rAf’s typhoon fighter jets, American f-35 aircraft and Hercules military planes. Parker-Hannifin, valued at £29billion, has 2,000 workers in the UK and 55,000 worldwide.
‘Intentions can change overnight’
WILL the Government stand by as more cutting-edge British aerospace companies fall to foreign raiders? Or will it finally move to save this key strategic industry from being plundered?
The board of Meggitt, which makes components for military and commercial aircraft, has agreed a £6.3billion takeover by American rival Parker-Hannifin.
If shareholders accept, which is highly likely, the deal will go through, with an almost inevitable loss of jobs in both the company and its UK supply chain.
It’s the second of our aerospace firms to be targeted in recent weeks, following a separate US bid for military technology specialists Ultra Electronics. If the Government doesn’t take action, there will soon be nothing left.
Business Secretary Kwasi Kwarteng is taking ‘an active interest’ in the takeovers but we have heard such talk before.
This time his words must be backed by deeds. If the deals are deemed to be against the national interest, they should be blocked. If not, there must at least be binding long-term guarantees that these businesses will not be stripped and allowed to wither away.
Aerospace is one of the high-tech industries at which Britain excels and will be crucial as we seek new markets in this post-Brexit world.
To allow it to be sold off and pillaged would be an act of national self-harm.