Parker Hannifin’s £6.3B Takeover of Meggitt

By Shivam Bapu, Daniel Winsor, Pristie Sharma, Tim Li, and Mohammed Safayat (UCL), Joshua Ooi, Danissa Wan, Jack Wu, Samuel Atlass, and Ayushman Nath (Cambridge)

 

Overview of the deal


Acquirer: Parker Hannifin

Target: Meggitt

Total Transaction Size: £6.3bn

Closed date: Q3 2022

Target advisors: Morgan Stanley, Bank of America, Rothschild & Co


Meggitt is poised to become the latest British engineer to fall into foreign ownership after its shareholders overwhelmingly backed a £6.3bn takeover offer from a US rival.


The vote ends a turbulent few weeks for the FTSE 100 group, which had been the subject of a rival approach from TransDigm before the US aircraft parts maker pulled out earlier this month. Meggitt’s board, led by chair Sir Nigel Rudd, had recommended the 800p share offer from Parker Hannifin, which was 100p less than the preliminary approach by TransDigm. Shares soared by 60% in early trading following the announcement, with the move representing a 70% premium on the share value of the company at the end of trading on Friday, July 30, when it was at 469.1p per share.


The British government said it was taking an “active interest” in the deal, with Meggitt one of the few independent British aerospace suppliers whose customers include Airbus, BAE, and Boeing. Parker, which already has operations in the UK employing c.2,000 people, has committed to maintaining its UK headquarters in Coventry. The buyer will continue with the firm’s investment in UK R&D, with plans to increase investment by 20% over the next 5 years, whilst meeting Meggitt’s government contractual obligations with the DoD.


“We are confident the combination of Meggitt and Parker creates a world-class provider of engineered aerospace solutions enabling us to advance next-generation civil and military aerospace programs” - Tom Williams, chair and chief executive of Parker Hannifin

Company Details (Acquirer - Parker Hannifin)


Parker Hannifin is a motion and control technologies manufacturer which was founded in 1917 and has been traded publicly on the NYSE since 1964. The company creates precision-engineered solutions and is split into two segments: The Diversified Industrial Segment, which focuses on the production of motion-control and fluid power system components for a wide range of industrial users, and The Aerospace Systems Segment, which focuses on the production of mechanical systems and components within the aerospace industry. With almost 60,000 employees worldwide, it is one of the largest corporations of its kind.


Founded in 1917, headquartered in Cleveland, Ohio

CEO: Thomas L. Williams

Number of employees: 58,000

Market Cap: $38,128m (as of 02/11/2021)

EV: $43.94b

LTM Revenue: $14,347m

LTM EBITDA: $3,092m

LTM EV/Revenue: 3.06x