Meggitt Sale to Parker-Hannifin Triggers U.K. Security Probe
(Bloomberg) -- Britain ordered a review of the planned 6.3 billion-pound ($8.7 billion) takeover of aerospace and defense firm Meggitt Plc by U.S.-based Parker-Hannifin Corp., citing national security concerns.
Kwasi Kwarteng, the U.K. business secretary, has instructed the Competition and Markets Authority to prepare a report on the proposed transaction by March 18, according to a statement Monday.
It’s the latest intervention by Prime Minister Boris Johnson’s government, which has said it would increase scrutiny of defense takeovers after a flurry of M&A in the sector. In August, Kwarteng ordered a probe into the proposed purchase of Ultra Electronics Holdings Plc by a private-equity firm.
The government has also scrutinised M&A in other sectors, issuing a Public Interest Intervention Notice on deals including Nvidia Corp.’s potential takeover of Arm Ltd., which is still being examined.
Meggitt shareholders backed the Parker-Hannifin deal last month. Parker said then it would engage with the government on legally binding commitments, after promising to keep a majority of the Coventry, England-based company’s board British and to maintain technology and manufacturing in the U.K.
Meggitt shares slipped 0.3% as of 8:55 a.m. Tuesday in London. Parker-Hannifin fell 0.7% on Monday in New York.
The Cleveland-based firm said following Kwarteng’s intervention that it looks forward to engaging with the government “and bringing the review of the transaction to a satisfactory conclusion.”
Both companies said they continue to expect that the deal will close in the third quarter of 2022.
Meggitt “looks forward to engaging constructively with the CMA on its review,” it said Tuesday.
Meggitt is one of the last independent British aerospace suppliers, with customers including Boeing Co., Airbus SE and BAE Systems Plc.
A new National Security and Investment Act, which will widen government powers to intervene on security grounds, is due to come into force in January next year.
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