UK government ‘minded to accept’ takeover of Meggitt by US buyer
The UK government has signalled it is likely to accept the £6.3bn takeover of the British defence manufacturer Meggitt, the second deal by a US buyer to receive a green light in a week.
The American industrial conglomerate Parker Hannifin said on Wednesday that it expected to complete the takeover within the next two months after receiving assent from the UK business secretary, Kwasi Kwarteng.
Meggitt, based near Coventry, makes wheels, materials and electronics for the F-35 fighter jet and the A400M transporter, both used by the UK military, as well as civilian aircraft made by Airbus and Boeing. Meggitt employs about 2,300 workers in the UK and 9,000 globally.
The takeover was one of a series of approaches by US investors for mid-sized British companies amid concerns they were undervalued by stock markets after coronavirus pandemic lockdowns. A US private equity firm’s £2.6bn takeover of Ultra, another midsized target and a maker of electronics for nuclear submarines, received preliminary assent from Kwarteng last week, while the government is still looking at a £5.4bn deal for the satellite company Inmarsat by its US rival Viasat.
The UK government on Tuesday night said the business secretary was “minded to accept undertakings offered by Parker Hannifin to address the concerns” it had on national security and competition grounds.
To address national security concerns, Parker has agreed to honour existing contracts with the UK Ministry of Defence, retain a majority of UK nationals living in the UK on Meggitt’s board, and make sure some military technology remains in the UK.
In May, Parker sold off its aircraft wheel and brake division to a US rival in order to satisfy European competition regulators. The UK confirmed that the divestment was also necessary to meet its conditions.
Parker, which is based in Cleveland, Ohio, fought off a rival bid for Meggitt by TransDigm, another Clevelandbased industrial conglomerate that advertised its aim to “provide private equity-like returns” from its investments.
Tom Williams, Parker’s chairman and chief executive, said: “We are pleased that following very constructive engagement with the UK government, the secretary of state is minded to accept the national security and competition undertakings we have offered as part of our pending acquisition of Meggitt. The combination of Parker and Meggitt is an exciting opportunity for both companies and we look forward to welcoming Meggitt to the Parker team.”