Parker-Hannifin Corp, the US maker of industrial motion control systems, agreed to buy the UK’s Meggitt PLC for ￡6.3 billion (US$8.8 billion) in cash to strengthen its hand in a rebounding aerospace industry.
The price of ￡8 a share is a 71 percent premium to Meggitt’s closing price on Friday, and the shares jumped toward that level in London.
The premium would make it harder for a rival to jump in, after a string of buyouts of UK aerospace and defense firms by US suitors.
The deal would also be the biggest ever for Parker-Hannifin, which has accelerated its buyout activity under chairman and chief executive officer Tom Williams.
Adding Meggitt would nearly double the size of the company’s aerospace systems unit, it said in a statement.
That would position Cleveland, Ohio-based Parker to better compete in an aviation sector that is just coming out of its biggest slump in history, as demand for aircraft returns following the COVID-19 pandemic.
“We strongly believe Parker is the right home for Meggitt,” Williams said in a statement. “Together, we can better serve our customers through innovation, accelerated R&D and a complementary portfolio of aerospace and defense technologies.”
Meggitt shares jumped 60 percent to ￡7.49 at 8:27am in London. Parker closed on Friday at US$312.03 in the US. With a market value US$40 billion, it is about five times the size of its target.
Parker-Hannifin said it would offer commitments to the UK, including a pledge to continue supplying the government.
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