Government could intervene in Meggitt takeover

The UK government has said it is "closely monitoring" the planned £6.3bn takeover of defence and aerospace firm Meggitt by a US company.

The statement by the Department for Business comes after Parker-Hannifin announced its 800p-a-share offer for Coventry-based Meggitt.

Meggitt employs 9,000 people worldwide, including 2,300 in the UK.

The government said it had powers to intervene in mergers and takeovers that raised national security concerns.

However, officials stressed that no decisions to intervene had been taken at this stage.

A government spokesperson said: "Under the Enterprise Act 2002, the Business Secretary has powers to intervene in mergers and takeovers which raise national security concerns.

"While commercial transactions remain primarily a matter for the parties involved, the government is closely monitoring the proposed acquisition of Meggitt by Parker-Hannifin."

It comes six days after the government said it was monitoring the proposed takeover of another UK defence firm, Ultra Electronics, by a US private equity-owned company, Cobham.

Ultra, a major supplier to the Royal Navy, has said it is "minded to recommend" the £2.6bn bid, subject to other terms, including assurances over national security.

Meggitt specialises in components for the aerospace, defence and energy industries. Companies that it supplies include Airbus and BAE Systems. It also has contracts with the Ministry of Defence, which Parker has pledged to honour.

Parker said it was "committed to being a responsible steward" of Meggitt.

It also said it would maintain Meggitt's product engineering and manufacturing staff levels in the UK, while increasing the number of apprenticeships by 10%.

The offer for Meggitt, which is listed on the FTSE 250 index, represents a 70% premium on Meggitt's closing share price on Friday, which was 469.1p.

The takeover announcement sent its share price soaring more than 55% in Monday trading to 733.8p.

"During our long-standing presence in the UK we have built great respect for Meggitt, its heritage, and its place in British industry," said Tom Williams, chairman and chief executive of Parker-Hannifin.

Parker, which already employs 2,000 people at its own UK sites, has said it is committed to keeping Meggitt's headquarters in Coventry.

It will also ensure that the majority of the board are UK nationals and increase research and development spending in the UK by 20% over the next five years.

Sir Nigel Rudd, chairman of Meggitt, 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."