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Kwarteng intervenes in £6.3bn Meggitt takeover

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  • MEGGY
Meggitt
Meggitt

Kwasi Kwarteng has intervened in a planned £6.3bn US takeover of Meggitt amid concerns it could harm national security.

The Government issued a public interest intervention notice into Parker Hannifin's deal on Monday night in a move it said came after ministers received official advice.

It means the competition regulator will now have until March to investigate the acquisition and whether it puts national security at risk.

If the Competition and Markets Authority decides there is a risk, the Business Secretary could be able to block the deal using powers under the Enterprise Act.

A decision to examine the Meggitt takeover comes just months after Mr Kwarteng made a similar intervention in the takeover of another defence company, Ultra Electronics, by a US private equity-backed suitor.

The CMA is already probing the £2.6bn purchase of Ultra by Cobham, a British defence company owned by US firm Advent International. Ultra supplies equipment such as sonar kit to the Royal Navy.

The latest move follows mounting concern among MPs over the Meggitt takeover, whose customers include the military. It makes brakes used on more than 70,000 civil and military aircraft.

Tobias Ellwood, chairman of the Commons defence select committee, had urged the Government to take "golden shares" in companies such as Meggitt to protect them from foreign takeovers.

"Look at the list of competencies that Meggitt has - advanced composites, avionics, sensors … you can easily argue Meggitt has every qualification to be treated the same as golden share companies BAE Systems and Rolls."

The board of FTSE 100-listed Meggitt recommended the 800p a share takeover in August, which was at a 71pc premium to its closing price the previous day.

It was, however, just 15pc ahead of Meggitt's pre-pandemic share price.

Mr Kwarteng tweeted: "Tonight, I instructed the @CMAgovUK to investigate the proposed acquisition of Meggitt by Parker Haniffin to assess any national security concerns. The UK is open for business, however we will take steps to protect our national security when necessary."

Critics have also pointed to Parker Haniffin's jobs commitments as an area of concern, after the US company said legally binding commitments as part of the deal, including keeping the combined business's headquarters in the UK, were valid for one year.

Parker Hannifin said looked forward to engaging with the Government and “bringing the review of the transaction to a satisfactory conclusion”. It still expected the deal to close in the third quarter of 2022.

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