Meggitt considers options for Parker-Hannifin and TransDigm Group acquisition proposals

On Aug. 2, Meggitt PLC (Christchurch, Dorset, U.K.), an aerospace company that produces composite and metallic aerostructures, and motion and control technology company Parker-Hannifin Corp. (Cleveland, Ohio, U.S.), announced that both parties had reached agreement on the terms of a recommended cash acquisition of Meggitt by Parker-Hannifin for 800 pence per share.

Meggitt also gave notice on Aug. 10 that it had received a preliminary, non-binding proposal from TransDigm Group (Cleveland, Ohio, U.S.) with a possible cash offer of 900 pence per share. Meggitt’s board is currently reviewing its options, including financial terms of both offers, as well as TransDigm’s plans for the company and the potential impact across all its stakeholders including, but not limited to, Meggitt’s employees, pension schemes and customers together with the UK Government and other regulatory bodies.

In particular, the Board of Meggitt says it will assess any competing proposal by reference to whether it includes commitments at least equivalent to those made by Parker in its initial acquisition announcement, including:

• An undertaking to offer the UK Government at least equivalent commitments to those agreed to be offered by Parker
• At least an equivalent level of certainty regarding satisfaction of regulatory approvals as provided by Parker
• Agreement with respect to the funding of Meggitt’s pension schemes on terms acceptable to the Meggitt Board
• Commitments in respect of employment and related protections at least equivalent to those made by Parker.

According to Parker-Hannifin, it believes Meggitt is well aligned with Parker and the goals of The Win Strategy — Parker’s global business system — which represents a unified strategic vision for its team members worldwide. Further, the company believes the acquisition would be significant strategically, in terms of enhancing both company’s future global aerospace and defense prospects, and that combined, the companies could provide a stronger value proposition for customers and a diverse but complementary product portfolio.

Conclusively, the directors of Meggitt continue to unanimously recommend the offer by Parker to Meggitt shareholders announced on Aug. 2, and intend to include that recommendation in the Scheme Document (a Court‑sanctioned scheme of arrangement under Part 26 of the Companies Act 2006), which was expected to be sent to Meggitt shareholders in the week commencing Aug. 16. The Board of Meggitt believes Parker’s offer continues to represent an attractive proposition for Meggitt’s shareholders and for its broader stakeholders, including its employees, pension schemes and customers, together with the UK Government, for the long term.

It should be noted, however, per the announcement, there can be no certainty that any firm offer will be made by TransDigm nor as to the terms on which any offer might be made. A further announcement will be made when appropriate.