Why Meggitt should shun the higher offer from private equity and sell to its aerospace rival instead
Meggitt would be better off being sold to Parker-Hannifin than accepting a higher bid from a private-equity-like suitor, a leading defence analyst has warned.
The FTSE 250-listed defence group this month became a takeover target for two US firms.
Aerospace giant Parker-Hannifin put forward a £6.3billion, 800p-per-share bid earlier this month.
FTSE 250-listed defence group Meggitt this month became a takeover target for two US firms
But on Wednesday it was trumped by rival aerospace engineer Transdigm, which barged in on the pre-agreed deal by putting forward an informal offer of 900p per share, worth £7billion.
Transdigm boasts of having a private-equity-style model, which has raised alarm bells in the City about the long-term future for technology and staff.
Independent aerospace and defence analyst Howard Wheeldon said what was important with a buyout is how much a new owner is willing to invest in a firm.
He said: ‘Meggitt is certainly a great company and one that has many long-term strengths.
‘It deserves far better than being ultimately taken over by a company such as Transdigm that is happy to boast it has a private-equity-like structure and culture.
Parker-Hannifin has a culture and forward-looking investment approach very similar to that of Meggitt.’