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£7bn offer signals American dogfight for Meggitt

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Meggitt
Meggitt

American interest in British defence companies has intensified after an Ohio-based company sought to gatecrash a £6.3bn takeover of Meggitt.

TransDigm has made a 900p-a-share “non-binding” offer for the Coventry-based defence contractor, valuing the company at about £7bn.

Meggitt shares jumped 16pc to 830p after the offer was announced.

TransDigm is one of the most acquisitive companies in the US defence sector, having bought around 60 businesses since floating in New York in 2006.

It has a base in Marlow, Buckinghamshire, after buying an arm of Cobham that makes radios and antennas for the aerospace market for $965m last year.

Meggitt, whose board is led by Sir Nigel Rudd, the former chairman of Heathrow airport, agreed an 800p-a-share offer with US firm Parker Hannifin earlier this month.

The Government is considering whether to intervene in the planned takeover.

The Parker Hannifin swoop came less than a week after Cobham, now owned by American buyout firm Advent, tabled a £2.6bn bid for Ultra Electronics, a major supplier to the Royal Navy.

The Meggitt board reiterated its recommendation for the lower 800p approach from Parker Hannifin given that there is no certainty that a firm offer will be made.

The FTSE 250 firm said it would need to assess whether the TransDigm offer provided similar assurances to the Government over security concerns and a commitment to fund the company’s pension schemes appropriately.

The 900p-a-share offer is almost double the value at which Meggitt shares were trading before the Parker Hannifin deal was announced.

Like TransDigm, Parker-Hannifin already has a base in the UK. It employs 2,000 people across a number of sites and has committed to keeping Meggitt’s headquarters in Coventry.

Meggitt employs 9,000 people worldwide, with 2,300 in the UK. Any such commitments would only be valid for a year, with the exception of research and development that would last for five.

Meggitt makes brakes used on more than 70,000 civil and military aircraft worldwide.

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

He refused to rule out job cuts in the long run, however, pledging only that a “significant number would be protected... we will evaluate all the talent that has made Meggitt successful and have the best of both companies”.