Takeover Target Meggitt Upgraded

US bid for UK aerospace firm at 800p is likely to succeed, says analyst Joachim Kotze

Morningstar Analysts 14 October, 2021 | 1:56PM
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We increase our fair value estimate for takeover target Meggitt (MGGT) to 800p from 610p as we believe there is a high probability that the 800p per-share bid by US firm Parker-Hannifin (PH) will succeed. The commitments made by Parker-Hannifin to the UK relating to the preservation of critical research and development and engineering skills should, in our view, appease any regulatory concerns. The deal is expected to close in third-quarter 2022.

Meggitt designs and manufactures high performance components and sub-systems for the aerospace, defense, and energy markets. Key products include aircraft wheels and brakes, fire and safety systems, sensors, fuel systems, and polymer seals. The FTSE company has been the target of overseas buyers, like Morrisons and Ultra Electronics this year. Because of the sensitive nature of Meggitt’s operations, the UK Government has flagged up national security concerns and officials have been in discussion with the US firm’s board.

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