Sterling makes UK firms easiest to take over, says Meggitt boss

TECHNOLOGY group Meggitt’s chief executive has warned that UK businesses are increasingly in the sights of predatory foreign rivals as the weak pound makes them cheaper for overseas buyers.

“British companies are probably the most attractive in the world to take over,” said boss Stephen Young when asked about the current environment for the FTSE 250 business as it posted interim results.

Last year Meggitt was the subject of intense speculation that US hedge fund Elliott was trying to engineer a bid for it, having built up a 5.2pc holding in the company, which has a £3.9bn market value. However, Mr Young dismissed the suggestion Meggitt was the subject of any approaches.

“Meggitt has been a takeover target in the 14 years I have been here,” he said, referring to perennial rumours around the business.

He added he had little contact with activist investor Elliott, which quietly reduced its stake around Christmas. “Elliott still holds a stake through contracts for difference but we don’t know how much,” Mr Young said. “We meet them at investor roadshows but otherwise we assume that they are happy shareholders.”

Meggitt used the results to welcome Donald Trump’s plans to beef up the US military, saying it was “well positioned” to win work as defence spending rose.

The upbeat outlook came as the engineer, which works in the aerospace, defence and energy sectors, reported interim figures showing improvement on a headline basis, but they were less positive once the impact of the weaker pound and one-offs was stripped out. In the six months to the end of June, Meggitt said revenue rose 10pc to £968m on a headline level, but was flat once currency movements were accounted for.

The picture was similar for pre-tax profit, jumping 376pc on a statutory level as currency revaluations and disposals lifted results. On an underlying basis it fell 6pc to £157m.

During the half-year, sales at Meggitt’s defence business rose 7.1pc to £315m, with the US military accounting for 69pc of revenue, signalling an improvement for the business.

“The long-term outlook for defence expenditure in the US, our single most important military market, is more positive than it has been recently,” the company said.

Mr Young said a recent win to get Meggitt’s braking systems on the best selling Airbus A320neo airliners was a “game-changer” for the firm, which would make it a major supplier to the pan-european aviation business.

Meggitt’s shares closed up 4p at 507p yesterday.