United Kingdom

Meggitt agrees £6.3bn takeover by US firm Parker-Hannifin

Boris Johnson is under mounting pressure from MPs to intervene and examine a £6.3billion takeover of UK defence giant Meggitt by US firm Parker-Hannifin.

The deal for Meggitt, a key defence supplier to the UK Government, was announced this morning. 

Parker-Hannifin, which already has operations in the UK employing around 2,000 people, has committed to maintaining the firm's headquarters in Coventry.

It also agreed to continue to meet Meggitt's contractual obligations with the Ministry of Defence. 

Meggitt is the latest large British company subject to a foreign takeover and MPs on the Defence Select Committee believe ministers must step in to see if the deal is acceptable amid national security concerns. 

Tobias Ellwood, the chairman of the committee, told MailOnline that there has been a 'one way ticket' in recent years of important UK firms being bought by foreign entities.

He said the Government should 'absolutely' intervene as he argued the UK cannot continue to 'haemorrhage' ownership of nationally significant companies. 

Boris Johnson is under mounting pressure from MPs to intervene and examine a £6.3billion takeover of UK defence giant Meggitt by US firm Parker-Hannifin

Aerospace technology firm Meggitt has agreed to be acquired by US firm Parker-Hannifin in a £6.3bn deal (Gareth Fuller/PA)

Meggitt, a FTSE 250 company, has confirmed an offer from the US engineering technology giant Parker-Hannifin valuing it at 800p per share. Shares soared by 60 per cent in early trading following the announcement.

The move represents a 70 per cent 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.

There have been repeated controversies in recent months and years over attempted foreign takeovers of British firms. 

The potential sale of Welsh microchip manufacturer Newport Wafer Fab to Chinese-owned Nexperia is currently being looked at by ministers with the Government also intervening in the proposed takeover of UK computer chip design firm Arm by US tech giant Nvidia. 

Responding to the Meggitt announcement, Mr Ellwood said there is a 'worrying trend' of key UK firms being bought by foreign entities.      

He said: 'On the one side of things, it is going to an American company, therefore many people will simply say let's be relaxed about this, we are open to international business, we attract businesses here, we can't be upset when other businesses come and attract British entities.

'But there is more to it than that in it has been very much a one way ticket, with so many companies even being pursued and subsumed by American entities or indeed going towards China as well.

'It then begs the question of what are we left with? What is our resilience? What is our ability to defend our own supply chain?'

Asked if the Government should intervene, Mr Ellwood said: 'I think that in the case with Meggitt, absolutely, because it is just such an enormous company.'

He added: 'With the world getting more dangerous, not less, we have to ask ourselves, is it in our security interest to see so many companies, see us haemorrhaging so many companies to interests abroad, not just the United States but right across the world?

'We used to pride ourselves on our defence, security, aerospace capabilities and in an ever tougher economic climate we should be holding onto these strengths, not ceding them, even to our allies.'

Labour MP Kevan Jones, a member of the committee, added: 'The Government should intervene and should do what the French are doing, looking at their entire defence sector and supply chain to ensure that national security is not compromised by takeovers.'

Parker-Hannifin has said it will at least maintain Meggitt's investment in UK research and development, with plans to increase this by 20 per cent over the next five years, subject to normal activity in the sector.

It comes after a period of turbulence during the pandemic, with Meggitt cutting 1,800 jobs last year across its global business after Covid-19 hit the travel sector.

On Monday, the company also revealed that it has swung to a profit for the first half of 2021 as it continued its post-pandemic recovery.

Tobias Ellwood, the chairman of the Defence Select Committee, told MailOnline that there has been a 'one way ticket' in recent years of important UK firms being bought by foreign entities

Parker-Hannifin chairman and chief executive Tom Williams said: 'We are committed to being a responsible steward of Meggitt and are pleased our acquisition has the full support of Meggitt's board.

'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.'

Meggitt chairman Sir Nigel Rudd said: '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, and holding a significant amount of intellectual property.

'Whilst Meggitt is currently pursuing a strong, standalone strategy which will deliver value to shareholders over the long term, Parker's offer provides the opportunity to significantly accelerate and de-risk those plans, while continuing to deliver for shareholders.'

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