Transdigm pulls out of race for Coventry engineering business Meggitt

Meggitt

One of the two American bidders competing to buy Meggitt PLC, the Coventry engineering company specialising in high performance components and subsystems for the aerospace, defence, and energy markets, Meggitt has pulled out.

In a statement released yesterday, the company said it does not intend to make a firm offer for Meggitt PLC.

Transdigm first put its hat in the ring for the company in August after news that American-based Parker-Hannifin Corporation had put in a bid for the company in a deal that valued the British company at around £6.3 billion.

The second, unsolicited, offer from American engineering company TransDigm Group Incorporated.valued the company at £7.1 billion.

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TransDigm Chairman W. Nicholas Howley said: “We have long admired and studied the Meggitt business and believed that a combination between the two companies could provide value to investors of both companies. However, based on the quite limited due diligence information that was made available and the resulting uncertainties, TransDigm could not conclude that an offer of 900 pence per Meggitt share would meet our long-standing goals for value creation and investor returns.

“TransDigm and our advisers put substantial time, effort, resources and expense into evaluating a potential transaction. We reached a memorandum of understanding with the Meggitt Pension Plan trustees, arranged the necessary financing for the acquisition which we anticipated would position us roughly in the range of leverage levels that we have used historically for larger acquisitions, and communicated our willingness to make commitments to HM Government comparable to those offered by the other bidder for Meggitt.  However, consistent with our disciplined approach to capital allocation, we make acquisitions only when we see a clear path to achieving our investment return goals with a reasonable degree of certainty.”

Takeovers of British companies hit a 14-year high by value in the first seven months of 2021, according to a Reuter’s analysis of financial analysts Refinitiv data, with no sign the buying spree is slowing after US companies targeted a leading supermarket and defence groups.

The total value of UK deals in the seven months was $198 billion, an increase of more than threefold on the same period last year, which included the onset of the pandemic.

Deals involving a British target totalled $34.9 billion in July, per cent less than June but more than seven times the value in July 2020.