Business Secretary Kwasi Kwarteng to refer takeover on security grounds: £6.3bn deal for Meggitt faces probe
- US aerospace group Parker Hannifin swooped on Meggitt in August, offering £8 a share for the FTSE 250 firm
- Military and political figures including Admiral Lord West and Tory grandee Lord Heseltine were among those who slammed the deal
- Officials are holding discussions with Parker Hannifin about commitments it could make to safeguard Meggitt and the UK’s access to its technology
- An industry source said the deal was going to be referred to the Competition and Markets Authority for a detailed probe
Kwasi Kwarteng is poised to launch an investigation into Meggitt’s £6.3billion takeover in a move that will test the Business Secretary’s mettle.
In the second dramatic intervention since his appointment, the Mail understands he is gearing up to order regulators to study the deal on national security grounds.
US aerospace group Parker Hannifin swooped on Meggitt in August, offering £8 a share for the FTSE 250 firm.
Taking action: Kwasi Kwarteng (pictured) is poised to launch an investigation into Meggitt’s £6.3billion takeover
But military and political figures including former head of the Royal Navy Admiral Lord West and Tory grandee Lord Heseltine were among those who slammed the deal.
Business department officials are holding discussions with Parker Hannifin about a series of commitments it could make to safeguard Meggitt and the UK’s access to its technology.
But an industry source said the deal was going to be referred to the Competition and Markets Authority (CMA) for a detailed probe into whether it could compromise national security.
Kwarteng is waiting to receive advice from officials before initiating the inquiry. The move will be a serious test for Kwarteng and the Government to show that the UK is brave enough to stand up to US predators and protect one of Britain’s most important industries.
A Government spokesman said: ‘Under the Enterprise Act 2002, the Business Secretary has powers to intervene in mergers and takeovers which raise national security concerns. While commercial transactions remain primarily a matter for the parties involved, the Government is closely monitoring the proposed acquisition of Meggitt by Parker Hannifin.’
Earlier this week a staggering 99.8 per cent of Meggitt shareholders voted in favour of the sale. The UK is already investigating US private equity giant Advent International’s £2.6billion pounce on Ultra Electronics, which makes submarine-hunting gear for the Royal Navy. Kwarteng ordered a review into that last month.
An investigation would hold the Meggitt sale up for several months while the CMA compiles a report.
The Business Secretary will then review its conclusions and would have the power to block the takeover, should it be deemed a serious risk to UK capabilities.
If this happened, Meggitt chairman Nigel Rudd would miss out on a £2m payday for his 250,000 shares in the group. He has been dubbed ‘Sir Sell-Off’ for his role in seven mega-deals for UK firms such as Boots, Invensys and Pilkington Glass.
The 74-year-old has been at the helm since 2015 and was due to step down last year before postponing his retirement when Covid hit. He has earned more than £2m already in chairman fees.
‘Sir Sell-Off’: Meggitt chairman Nigel Rudd
Coventry-based Meggitt traces its history back to 1850s and the invention of the world’s first altitude meter for hot air balloons. It has 9,000 staff – including 2,000 in the UK – and makes parts for planes and military aircraft such as the Typhoon, F-35s and Boeing’s 737 Max. Commercial customers include BAE Systems, Rolls-Royce, Airbus and Lockheed Martin.
Parker Hannifin could agree to protect UK jobs and factories for several years in an attempt to get its £6.3billion buyout over the line.
When making its initial offer, Parker Hannifin laid out a series of proposed legally binding commitments to preserve Meggitt, such as keeping its headquarters in the UK, to sweeten the deal. But these only lasted for one year. Sceptics believe any pledges are likely to be worthless.