Meggitt Soars As Parker Makes $8.75 Billion Deal For Defense Play

© Reuters.

By Dhirendra Tripathi – Meggitt (LON:) ADR (OTC:) soared 57% Monday after an all-cash acquisition offer from Parker-Hannifin (NYSE:) for a bigger stake in the defense industry.

At 8 pound sterling per Meggitt share, the offer values the U.K. company at 6.3 billion pound sterling (approximately $8.75 billion).   

Parker stock dipped 0.7%. There are concerns that the U.K. government may take a closer look at the deal given the sensitive nature of the transaction.

Meggitt is a market-leading industry provider of braking systems for commercial, business and defense aircraft, fire protection and safety systems, power and motion, fuel systems, avionics and sensors and advanced polymer seals.

The company’s defense business accounts for 46% of group revenue with over 70% of it derived from its core U.S. market.

Parker expects the combination to be earnings accretive in the first full 12 months after closing.

The acquirer expects the acquisition to achieve $300 million of pre-tax synergies from its combination with Meggitt.

Parker expects the combination to be earnings accretive in the first full 12 months after closing.


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