Meggitt rumoured to have started strategy review after takeover approach from USA - report
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Meggitt, the UK-based listed engineering group, is rumoured to have kickstarted a strategy review after receiving a takeover approach earlier this year, the Financial Times reported. The market report did not cite a source for the information but said the approach is believed to have come from one of Meggitt’s peers based in the USA.
Rothschild, a long-term adviser to Meggitt, is believed to be putting together plans for a potential defence, the report said. The company is believed to be considering options including a possible merger with Cobham, the UK-listed aerospace and defence group, the item reported.
The report noted that Meggitt hired a new chairman earlier this year, Nigel Rudd, which refuelled longstanding takeover speculation; the US companies Honeywell of Morristown, New Jersey, and Hartford, Connecticut-based United Technologies were tipped as possible acquirers, the report stated.
Meggitt’s house broker, Morgan Stanley, was quoted suggesting that customer companies such as Boeing and Airbus might favour a certain amount of consolidation among their fragmented suppliers. However, they might prefer Meggitt to acquire smaller competitors rather than be sold itself, the broker said.
Morgan Stanley added that a deal with the company’s rivals may incur regulatory interest and prospective trade buyers may not be interested in acquiring Meggitt’s energy operations, which generated 18% of the group’s revenues last year, the item reported.
Meggitt’s share price hit a record high four months ago but since that time has lost 20%, the report noted. The company has a GBP 3.63bn (USD 5.62bn) market cap.
Source Financial Times
"...Meggitt rose 1.3 per cent to 470.5p amid rumours that the defence and aerospace engineer has begun a strategy review following an approach earlier in the year from a US peer.
Rothschild, one of Meggitt’s longstanding financial advisers, was rumoured to be drawing up potential defence plans. A merger with defence contractor Cobham , up 0.9 per cent to 271p, was said to be among the options under consideration.
Meggitt’s appointment of Sir Nigel Rudd as chairman in April revived long-running speculation that it could be a bid target, with United Technologies and Honeywell seen among the potential buyers. Since reaching a record high in March, Meggitt shares have lost 20 per cent..."