- The US-led takeover of two British defence giants has recently created a buzz in the market.
- After the Cobham deal last year, now Ultra Electronics and Meggitt deals are leading to a US-led takeover of UK defence industry.
- The US companies have promised to protect jobs and invest in research in a bid to convince ministers on both sides to support the deals.
Job losses as well as debt is increasing in Britain amid coronavirus crisis, which is bound to create trouble for politicians, trade unions and investors this year after witnessing an unprecedented private equity buying spree, especially in the UK defence industry. The US-led takeover of two British defence giants has recently created a buzz in the market. Cobham Group, which was taken over last year by US private equity house Advent in a £4 billion deal, confirmed it has agreed a £2.57 billion deal for London-listed Ultra Electronics.
Also Meggitt, which is its rival defence group, reiterated its plans of agreeing to a £6.3 billion bid from the US business Parker-Hannifin. It stated that the takeover panel of the stock market will be setting a deadline for TransDigm, which is another one of its rivals, for the purpose of making its own £7billion bid binding.
After the Meggitt announcement, a confirmation was given by the takeover panel TransDigm to decide if it wants to walk away or make a bid before 14 September 2021. On the other hand, Cobham stated that it was looking forward to work with the UK government, along with other stakeholders. It has also agreed to legal commitments which safeguard Ultra’s role in UK’s economy and defence sector which is crucial for national security.
After receiving an offer for a takeover by the US rival Parker-Hannifin, the shares of Meggitt have soared more than 50% to a record high. Meggitt, which is a UK-based aerospace and defence company that produces components for US F-35 Lightning II fighter jets, will potentially double the operations of Parker’s aerospace.
But after the £4 billion takeover of Cobham last year, which led to dismantling of the firm even though all the assurances were provided beforehand, the scepticism over job losses have been increasing. That’s why the US suitors of both Meggitt and Ultra Electronics have made pledges to protect the jobs and invest in research to convince the ministers for providing their support towards the deals. In this light, we would glance through 5 FTSE-listed aerospace and defence stocks
Rolls-Royce Holdings (LON: RR)
Founded in 1884, British multinational aerospace and defence company Rolls-Royce Holdings plc operates as an industrial technology company across the globe through its four segments, which are Civil Aerospace, Power Systems, Defence, and ITP Aero. With a market capitalisation of £9.41 billion as of 16 August 2021, the company is listed on the London Stock Exchange, and is a constituent of the FTSE 100 Index.
In the last one year, the shares of Rolls-Royce Holdings plc gave returns of 24.36 per cent and closed at £109.70 on 16 August 2021.
Boeing Co. (LON: BOE)
Founded in 1916, Boeing is an American multinational company, which specialises in designing, manufacturing, and selling airplanes, rotorcraft, rockets, satellites, telecommunications equipment, and missiles across the globe. It also offers leasing and product support services. With a significantly large market capitalisation of £138.04 billion as on 16 August 2021, Boeing is among the top defence contractors worldwide. The Fortune 500 Company operates via 4 segments, which are Commercial Airplanes, Defense, Space & Security, Global Services, and Boeing Capital. It has been a lucrative investment option in the aerospace and defence sector.
In the last one year, the shares of Bae Systems plc gave returns of 30.16 per cent and closed at £ 230.50 on 16 August 2021
Bae Systems Plc (LON: BA)
Founded in 1999, London-based multinational arms, security, and aerospace company Bae Systems plc classifies its operations into five segments: electronic systems, cyber & intelligence, platforms & services (US), air, and maritime. It is one of the largest defence companies across the globe, and is also the largest defence contractor in Europe. With a market capitalisation of £18.54 billion as of 16 August 2021, it is among the top UK defence companies, and is a constituent of the FTSE 100 Index.
In the last one year, the shares of Bae Systems plc gave returns of 8.19 per cent and closed at £580.00 on 16 August 2021.
Qinetiq Group (LON: QQ)
Founded in 2001, British multinational defence Technology company QinetiQ Group plc is a science and engineering company. It mainly serves the defence, security, and aerospace markets in the UK and globally. With a market capitalisation of £1.96 billion as on 16 August, it is among world's largest defence contractors. The company is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index.
In the last one year, the shares of Bae Systems plc gave returns of 11.34 per cent and closed at £343.80 on 16 August 2021.
Senior PLC (LON: SNR)
Founded in 1933, the holding company for a global group of firms in the manufacturing and engineering industries, Senior plc, specialises in designing, manufacturing, and marketing high-tech components and systems for the main producers in the aerospace, defense, land vehicle, and power and energy sectors in various countries. With a market capitalisation of £707.56 million as on 16 August 2021, it is one of the major UK aerospace and defence firms listed on the London Stock Exchange and is also a constituent of the FTSE All Shares index.
In the last one year, the shares of Senior plc gave returns of 240.98 per cent and closed at £ 173.70 on 16 August 2021.