Parker-Hannifin, a U.S.-based company, is reportedly inching closer to acquire UK aerospace company, Meggitt, after rival bidder, TransDigm stated that it would not be making an offer. According to Ohio-headquartered TransDigm, the company was pulling out of the race as it was not sure of being able to secure higher returns on its investment.
For the record, the government of UK is monitoring several plausible deals involving UK firms. These also comprise a bid for Ultra Electronics by Cobham, a company owned by U.S. PE firm Advent. In addition, the government is conducting national security reviews regarding the potential acquisition of Perpetuus Group, a small manufacturer the lightest and thinnest known supermaterial, graphene.
As per reliable sources, Meggitt’s board has already recommended that stakeholders should vote for a takeover offer of £6.3 billion that was made in early August by Parker-Hannifin. The company had offered a price of 800p per share. However, TransDigm quickly prompted that it was considering a share offer of 900p that would have valued the UK-based Meggitt at £7.1 billion.
As per W Nicholas Howley, the chairman of TransDigm, the company had already arranged the funding for pulling off an acquisition of Meggitt. Howley further stated that the firm had been in contact with the UK government providing assurances on investment and jobs equivalent to the ones given by Parker.
But it was not capable of guaranteeing the returns that it tried to make on investments. Howley added that on the basis of the resulting uncertainties and the limited availability of due diligence information, TransDigm could not infer that an offer of 900p per share would meet the company’s longstanding goals for investor returns and value creation.
For the uninitiated, Meggitt makes parts comprising engine sensors, brakes, and wheels for civilian aeroplanes as well as parts for fighter jets including the US F-35. The company is one of the numerous British aerospace and defense firms that were subjected to approaches in the last few months.
Source credit: https://www.theguardian.com/business/2021/sep/07/us-firm-nears-takeover-of-uk-aerospace-supplier-meggit-after-rival-pulls-out