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Highlights
- Meggit has been approached for over £7.03-billion takeover bid by TransDigm.
- US rival Parker-Hannifin had made an offer worth 800 pence per share last week.
- Meggit’s share price rose to 830 pence, up by 16 per cent on Wednesday, but still remained below the 900 pence offer price.
Meggit (LON: MGG), the UK aerospace engineer, has been approached for over £7.03-billion takeover bid by TransDigm. Meggit had accepted a lower bid only a few days ago from Parker-Hannifin. The move is being seen as opening up of US bidding war for a historic British company.
The aerospace and defence company that is in the business of making brakes and wheels for military fighter planes said on Wednesday TransDigm, an aerospace company, submitted a takeover bid of 900 pence each share.
Offers so far
US rival Parker-Hannifin had made an offer worth 800 pence per share last week, valuing Meggit at £6.3 billion. The latest offer by TransDigm comes at double of Meggit’s share price. Meggitt’s shares had lost about 30 per cent value last year but have gained around 77 per cent since last week following the announcement of the Parker deal.
The FTSE 250 company said in a statement that for shareholders, Parker’s offer was an attractive proposition. Meggit also said that it would study TransDigm’s proposal and how it could impact the company’s pension schemes, employees, and customers in consultation with the various regulatory bodies and the British government.
Meggit’s financials
The shares of the company were trading down by 1.40 per cent at GBX 818.40 at 08:53 AM GMT+1 on 12 August. The shares have a market capitalisation of £6,485.40 million and have given one-year return of 160.13 per cent.
The company’s revenue for the first half of 2021 fell by 26 per cent to £680 million from £916.8 million in the same period a year ago. Underlying profit before tax fell 43 per cent to £48.4 million from £85.5 million a year ago.
The company’s performance in the first half was impacted by Covid-19. Group’s organic revenue fell 16 per cent in the period compared to trading in the first quarter of 2020, before the pandemic struck. The company’s outlook said that revenue would broadly be in line with 2020. Underlying profit is expected to be ahead of what it was in 2020, and the company also expects to have a positive free cash flow.
Conclusion
After TransDigm’s offer, Meggit’s share price rose to 830 pence, up by 16 per cent on Wednesday, but still remained below the 900 pence offer price. This gives the impression that investors do not see there is enough possibility of the deal going through.
Meggitt, which employs 9,000 people globally, including 2,300 in the UK, said that it would be publishing documents with more details on Parker’s proposal next week. It has also given TransDigm access to information that would help the company conduct due diligence.