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Summary
- Meggitt Plc shares surged over 57% after it agreed to an acquisition by the US-based Parker-Hannifin Corporation.
- The acquisition price of 800p per share is a premium of 70.5% over the last closing price of Meggitt Plc shares at 469.1p per share as of 30 July 2021.
Britain-based Meggitt Plc, which designs and manufactures the components and sub systems for the aerospace and defence sector, has agreed to an acquisition bid of £6.3 billion by the US-based Parker-Hannifin Corporation, a leading manufacturer of motion and control technologies and systems. The development led the shares to make a fresh 52-week high today of GBX 758.00. Also, the development, along with another deal news of Sanne Group, made the midcap index, FTSE 250, to touch a record high of 23,306.07.
Copyright © 2021 Kalkine Media
The Offer
Under the acquisition scheme, Meggitt Plc (LON: MGGT) shareholders will receive 800p in cash for each Meggitt share. The offer values the company’s existing issued and to be issued ordinary share capital at £6.3 billion.
The acquisition price of 800p per share is a premium of 70.5% over the last closing price of Meggitt Plc shares at 469.1p per share as of 30 July 2021 and a premium of 73.8% to the volume-weighted average closing of 460.2p per share for the six-month ended 30 July 2021.
The exact terms of the acquisition will be revealed to Meggitt Plc shareholders before the Court Meeting and General Meeting, where the acquisition offer should be approved by at least 75% of shareholders. The company expects the acquisition to be complete by the third quarter of 2022.
After the acquisition announcement, Meggitt Plc shares saw a significant jump in volume and share price surging to a new high. The share price of Meggitt Plc was up by 57%, trading as high as GBX 750 in the early morning trades of 2 August 2021. In the last one year, Meggitt Plc has given 171.5% returns to its shareholders.
Meggitt Plc H1 earnings
Along with the acquisition announcement, Meggitt Plc also declared its half-yearly results. The company’s revenue saw a decline of 26% at £680 million during the first six months ended 30 June 2021, mainly due to the downfall in civil aerospace segment revenue which was impacted by Covid-19 restrictions and lockdown. As a result, the reported profit before tax was at £48.4 million, down by 43% compared to the same period last year.
Acquisition for synergy
Parker-Hannifin Corporation believes the acquisition of Meggitt Plc will nearly double its aerospace business revenue, and both companies will complement each other across a diverse portfolio of products.
Meggitt Plc, headquartered in the United Kingdom, is a leading aerospace & defence technologies supplier with many international blue-chip customers and a leading product portfolio. The company generates 70% of its revenue from sole-source positions. Before the Covid-19 pandemic, the company reported consecutive quarters of revenue growth and recorded operating profit and cash generation. Over the last four years, the company has streamlined its portfolio with a focused strategy and new technology investment.
Parker-Hannifin Corporation
The US-based company is also referred to as Parker, one of the leading manufacturers and specialised in motion and control technology. The company employs a team of over 50,000 people worldwide, with operations in over 49 countries. The company serves companies from the mobile, industrial and aerospace markets. In the fiscal year ended 30 June 2020, the company reported net sales of USD 13.7 billion and net income of USD 1.21 billion.
The company has been operating for over 50 years in the UK market and currently employs more than 2100 people. The company is an experienced acquirer with prior experience in successfully integrating companies into its business.
