Defense and aerospace company Meggitt has received a second takeover offer from a US competitor. The company values FTSE Index 250 manufacturers bought for £7.1 billion, a move that could trigger another bidding war against a long-established British company.
Meggitt, which makes wheels and brakes for military fighter jets, announced on Wednesday that American aerospace company TransDigm has submitted an offer for 900 pence per share.
Last week it exceeded the offer of 800 pence per share US competitor Parker Hannifin values Meggitt at £6.3 billionThe latest offer is almost twice Parker’s previous Meggitt stock price.
Meggitt’s board has recommended Parker’s proposal to shareholders. TransDigm’s bid is preliminary and non-binding, but the firm offer may trigger a bidding war.
After the TransDigm method was exposed, Meggitt’s stock price rose 16% to 830p on Wednesday. However, it is still lower than the price of 900p, which shows that investors believe that the possibility of transaction failure is high.
This is the latest attempt by a potential foreign owner of a UK listed company, because people have been worried that the valuation of the UK company is clearly underestimated. Some analysts cited concerns about Brexit One of the factors hindering the development of British companies.
In addition to competitor acquisitions, the number of deals supported by private equity investors last year was particularly notable. Supermarkets Asda and Morrisons, St. Modwin Real Estate, Signature Aviation, Fund managers Sanne and Equiniti, and Infrastructure investor John Laing Have become the target of a buyout.Bargainers also see the British aerospace industry in their eyes, Senior and Hyperelectronics The goal between the two.
Vectura, a Wiltshire inhaler manufacturer, is In the fight for acquisition Between American tobacco company Philip Morris and private equity firm Carlyle.
In the first seven months of 2021, the acquisition value of British companies hit a 14-year high, partly due to the pandemic and Brexit.
Meggitt is a member of the FTSE 250 Mid-Cap Index and has 9,000 employees worldwide, of which 2,300 are in the UK. It mainly produces wheels, brakes and fire extinguishing systems for military and civilian aircraft such as Lockheed Martin’s F-35 Lightning II aircraft.
Meggitt said it intends to release documents next week providing more details on Parker’s proposed transaction. At the same time, it gives TransDigm equal access to information for due diligence.
The company said it will assess whether TransDigm has made “at least the same commitment as Parker,” because the latter promised to keep Meggitt’s UK headquarters in Coventry and maintain its R&D, product engineering and manufacturing headcount. operate. However, Parker expects an unknown number of layoffs after the acquisition.
Meggitt’s two suitors were relatively matched. TransDigm has a market capitalization of 34 billion U.S. dollars (24.5 billion pounds), with 2020 revenue of 5.1 billion U.S. dollars and profit of 653 million U.S. dollars. In contrast, Parker’s market value is 38.5 billion U.S. dollars, revenue in 2020 is 13.7 billion U.S. dollars, and profits are 1.2 billion U.S. dollars.
The potential acquisition of Meggitt may lead to review by the British government, which is already considering a proposed acquisition of Meggitt Cobham’s Ultra Electronics is backed by U.S. private equity investor Advent,and Newport Wafer Fab of Chinese computer chip manufacturer NexperiaIt is understood that the Secretary of Commerce “showed a positive interest” in Cobham’s approach to Ultra, and Prime Minister Boris Johnson has personally ordered a review of the wafer manufacturer.
Rory Smith, an analyst at the investment bank Investec, called Meggitt’s possible acquisition the “Megxit” of the UK stock market. But he warned that “the risks faced by the Happy Alliance will increase” and said that “British political interference is not unimaginable”.
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A government spokesperson said: “According to the 2002 Corporate Law, the Secretary of Commerce has the right to intervene in mergers and acquisitions that raise national security concerns.
“Although commercial transactions are still primarily a matter of the parties involved, the government is closely monitoring the proposed acquisition of Meggitt.”
TransDigm did not immediately respond to a request for comment.
