Thwarted: Big blow to Sir Selloff as business secretary Kwasi Kwarteng orders inquiry into Meggitt deal amid national security concerns
The Business Secretary slammed the brakes on the sale of Meggitt last night after announcing he will intervene in the takeover of the firm by a US rival.
Kwasi Kwarteng has instructed the Competition and Markets Authority (CMA), the UK’s competition watchdog, to investigate the takeover of the British defence giant by Parker-Hannifin and produce a report before March 18 next year.
This means the acquisition is likely to be held up for at least six months or scrapped altogether on national security grounds.
Meggitt has around 9,000 staff, 2,000 of which are in the UK, and makes components for planes and military jets including ‘the Royal Air Force’s Typhoon fighters (pictured)
The move will come as a blow to Meggitt’s chairman, Sir Nigel Rudd – dubbed Sir Sell-Off due to his role in handing a litany of UK companies to foreign buyers, including glass business Pilkington and pharmacy chain Boots.
Rudd stands to make £2million from his shares if the deal goes through, while chief executive Tony Wood is in line to pocket as much as £7.4million.
Kwarteng’s decision was first revealed by the Mail last month.
It was backed by Tory grandee Lord Heseltine, who said: ‘I think this is a proper decision by the Secretary of State.
It’s in line with international practice and it makes industrial sense. It is important that the national interest be considered in these takeovers.’
Coventry-based Meggitt traces its roots back to the 1850s and the invention of the first altitude meter for hot air balloons.
It has around 9,000 staff, 2,000 of whom are in the UK, and makes components for planes and military jets including ‘black boxes’, wheel and brake components for the Royal Air Force’s Typhoon fighter jets and kit for American F-35 aircraft.
Meggitt was targeted earlier this year by Parker-Hannifin and Transdigm, two firms located in Ohio.
Parker-Hannifin saw its £6.3billion takeover offer overwhelmingly backed by Meggitt shareholders last month, with 99.8 per cent voting in favour.
Blocked: Sir Nigel Rudd (left) stands to make £2m from his shares if the Meggitt deal goes through but Business Secretary Kwasi Kwarteng (right) has ordered an investigation
The US firm made a series of commitments related to jobs, research funding and governance when it made its offer – although many of these will only last for one year.
Sceptics believe any pledges are likely to be worthless.
A string of UK defence firms have been snapped up by private equity groups and foreign competitors in recent years.
Cobham was sold to American private equity outfit Advent International in a £4billion deal in 2020, despite protests from members of the company’s founding family, senior military figures and MPs.
Earlier this year, Advent agreed a £2.6billion deal to take out Ultra Electronics, which makes submarine-hunting equipment for the Royal Navy. However, the merger faces a CMA probe.
GKN, one of Britain’s oldest manufacturing businesses, was sold to engineering conglomerate Melrose for £8billion in 2018.
Melrose has announced ‘significant’ job cuts and plans to close one of GKN’s factories in Birmingham.
A spokesman for Parker- Hannifin said: ‘We look forward to engaging with the Government on the process and bringing the review of the transaction to a satisfactory conclusion.
‘We continue to expect that the transaction will close in quarter three 2022 and will not offer any further comment on regulatory processes.’