Parker to acquire Meggitt in $8.8bn aerospace and defence deal

October 2021 | DEALFRONT | MERGERS & ACQUISITIONS

Financier Worldwide Magazine

October 2021 Issue

In a transaction with strong organisational culture alignment, US engineering technology giant Parker Hannifin is to acquire UK defence and aerospace company Meggitt for $8.8bn.

Under the terms of the agreement, Meggitt shareholders will receive an 800-pence-a-share cash offer, marking a 71 percent premium to Meggitt’s last closing price. Parker and Meggitt’s boards of directors have unanimously approved the acquisition.

An international group headquartered in the UK, Meggitt is a high-value, leading provider of proprietary and differentiated aerospace and defence technologies. Meggitt, like Parker, has a rich heritage in the aerospace and defence segments with a strong culture, underpinned by a number of core values focusing on teamwork, engagement, integrity, operational excellence and innovation.

With a global brand, a complementary business mix, an impressive international base of blue-chip customers and a leading product portfolio, Meggitt has been transforming its business over the last four years through its focused strategy, streamlining its portfolio, investing in new technologies and growing through its customer-aligned divisions.

“Meggitt is one of the world’s foremost aerospace, defence and energy businesses, leading the market with a strong portfolio of technology and manufacturing capabilities,” said Sir Nigel Rudd, chairman of Meggitt. “While Meggitt is currently pursuing a strong, standalone strategy which will deliver value to shareholders over the long-term.

“Parker’s offer also includes far-reaching commitments that will ensure that Meggitt remains a significant presence in the UK, increasing investment in research and development, and increasing the number of apprenticeship opportunities,” he continued. “Meggitt’s board is confident that Parker will be a responsible steward of Meggitt and unanimously recommends Parker’s offer.”

Complementary across diverse portfolios of products, the acquisition of Meggitt nearly doubles the size of Parker’s aerospace systems segment. Parker believes the combined company is poised for strong growth, supported by the commercial aerospace recovery.

A leading worldwide diversified manufacturer of motion and control technologies and systems, Parker provides precision engineered solutions for a wide variety of mobile, industrial and aerospace markets. It has a long and successful history in the UK, having operated in the UK for over 50 years, and currently employs more than 2100 team members in 18 facilities across the country.

“The combination of Parker and Meggitt is an exciting opportunity for both companies’ team members, customers, shareholders and communities,” said Tom Williams, chairman and chief executive of Parker. “We strongly believe Parker is the right home for Meggitt. Together, we can better serve our customers through innovation, accelerated R&D and a complementary portfolio of aerospace and defence technologies.”

“We are committed to being a responsible steward of Meggitt and are pleased our acquisition has the full support of Meggitt’s board,” he continued. “We fully understand these responsibilities and are making a number of strong commitments that reflect them. During our longstanding presence in the UK, we have built great respect for Meggitt, its heritage and its place in British industry. Our own journey over more than 100 years has taught us the importance of a strong culture and reputation.”

Acting as legal adviser to Meggitt is Slaughter and May. Freshfields Bruckhaus Deringer LLP is acting as legal adviser to Parker. Rothschild & Co and Morgan Stanley are acting as financial advisers to Meggitt, while Citigroup is acting as financial adviser to Parker.

The acquisition is expected to complete during the third quarter of 2022, subject to the satisfaction of antitrust and regulatory approvals.

Mr Rudd concluded: “Parker’s acquisition of Meggitt provides the opportunity to significantly accelerate its technology and manufacturing capabilities, while continuing to deliver for shareholders.”

Fraser Tennant