Chiefs of UK defence giant Meggitt are set for a £12m deal windfall as private equity swoops on the firm
- The firm is set to be sold to US industrials giant Parker-Hannifin
- The company became a takeover target on Monday when Parker tabled a £6.3 billion bid for the FTSE 250 firm
- The deal values its stock at 800p per share – 70% more than before the approach
The bosses of Meggitt could reap more than £12 million from the sale of the company to US industrials giant Parker-Hannifin. The company became a takeover target on Monday when Parker tabled a £6.3 billion bid for the FTSE 250 firm.
The deal values its stock at 800p per share – a whopping 70 per cent more than it was worth before the approach – and the board has backed the deal.
If it goes through, chief executive Tony Wood could take away as much as £7.4 million from the sale of his stake in the company and his long-term share awards.
Meggitt traces its history back to 1850s and the invention of the altitude meter for the hot air balloon. It now has a 9,000-strong global workforce, including 2,000 in the UK, and makes parts for planes and military aircraft such as the Royal Air Force’s Typhoon jets
Finance boss Louisa Burdett could pocket up to £2.8 million. And chairman Sir Nigel Rudd, dubbed by his critics ‘The Man Who Sold Britain’, will receive £2 million for his 250,000 shares.
Coventry-based Meggitt traces its history back to 1850s and the invention of the altitude meter for the hot air balloon. It now has a 9,000-strong global workforce, including 2,000 in the UK, and makes parts for planes and military aircraft such as the Royal Air Force’s Typhoon jets.
Wood, 55, has led it since the start of 2018, when he was promoted from operations chief. He was previously the head of Rolls-Royce’s aerospace division. Burdett, 52, assumed her role in 2019, after four years at Victrex. Rudd, 74, has been at the helm of Meggitt’s board since 2015.
He was planning to step down as chairman last year but when Covid broke out postponed his retirement to give continuity. Rudd has earned more than £2.1 million in chairman fees from his time at Meggitt, and owns another £2 million of shares in the group.
Should the merger go through, it will be the seventh mega-deal Rudd has overseen with an overseas buyer, and the second in a year. He also chaired Signature Aviation – previously known as BBA – when it was sold to a consortium including Microsoft founder Bill Gates and private equity firm Blackstone last year.
The serial chairman sold a series of businesses between 2006 and 2016, including glass maker Pilkington and Boots. The Meggitt trio’s takings would be determined by a board committee that decides their remuneration packages.
The head of Parliament’s defence committee, Tobias Ellwood, has said the Government should take ‘golden shares’ in companies such as Meggitt to stop them falling prey to foreign takeovers
Parker said in its offer documents that the pay committee is likely to hand Wood and Burdett less than the full amount of shares that are bound up in long-term performance plans. But it is at their discretion, and often in takeovers these board groups allow bosses to receive the maximum amount of shares.
Rudd, Wood and Burdett’s payouts could come at the expense of UK jobs and factories. Parker’s bid has proven controversial, and it comes at the same time as US private equity group Advent International is trying to buy Meggitt’s FTSE 250 peer Ultra Electronics.
Business Secretary Kwasi Kwarteng is closely monitoring the deal talks, signalling he is considering intervening. Although Parker has taken the rare step of offering a string of promises, such as keeping Meggitt’s headquarters in the UK and investing in its research division, almost all the undertakings only cover a 12-month period.
This has prompted concerns about the long-term prospects for its staff, sites and technology.
Meggitt chief executive Tony Wood
There is now a growing chorus of politicians and former military chiefs urging ministers to call in the deals and investigate them to see if they pose a threat to Britain’s national security.
The head of Parliament’s defence committee, Tobias Ellwood, has said the Government should take ‘golden shares’ in companies such as Meggitt to stop them falling prey to foreign takeovers. Such shares, which ministers have in BAE Systems and Rolls-Royce, mean they can veto takeovers.
And the former head of the Royal Navy, Admiral Lord West, has said he believes the Meggitt swoop could be a threat to national security. He added that ministers should consider levying fines against companies that break their undertakings.