The government is taking an “active interest” in the £6.3 billion takeover of Meggitt, the aerospace group, and may demand extra pledges on jobs and investment from its American buyer.
Parker-Hannifin secured boardroom approval for its 800p-a-share bid this morning, which valued Meggitt at a 71 per cent premium to Friday’s closing price.
The deal follows last month’s proposed takeover of Ultra Electronics, which, like Meggitt makes components for military aircraft. The proposed sales have prompted concerns over jobs, investment and the security of defence supply chains.
Kwasi Kwarteng, business secretary, will request further clarity from Parker-Hannifin over its intentions and plans to protect Meggitt’s domestic workforce, sources said. He wants the Ohio-based group to provide stronger guarantees on future investments in the UK.
Meggitt, which has its headquarters in Coventry, employs 9,000 staff globally, including 2,300 in Britain. It works on military programmes for the BAE Systems Typhoon and Lockheed Martin F-35 fighters and makes sensors, landing gear components and other kit for Boeing and Airbus. Less than 5 per cent of its turnover comes directly from the Ministry of Defence.
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The Parker-Hannifin offer propelled shares in Meggitt 266p, or 56.7 per cent, higher to 735p.
Kwarteng signalled last week that his department was prepared to intervene in the £2.6 billion bid for Ultra Electronics because of potential concerns over national security.
The business secretary has not decided whether to subject the Meggitt deal to the same level of scrutiny.
The American group has made a series of commitments in an attempt to win over the government. It has promised to maintain Meggitt’s UK headquarters, ensure the board retains a majority of British nationals and to increase research and development investment in the UK by 20 per cent for the next five years, subject to market conditions. British headcount will remain at “no less than current levels”, Parker-Hannifin added.
The Department for Business, Energy and Industrial Strategy said Kwarteng had the power to intervene in deals that raise national security concerns.
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“While commercial transactions remain primarily a matter for the parties involved, the government is closely monitoring the proposed acquisition of Meggitt by Parker-Hannifin.”
Sir Nigel Rudd, Meggitt’s chairman, said the American predator had made “far-reaching commitments that will ensure that Meggitt remains a significant presence in the UK”.
