Parker-Hannifin To Acquire Meggitt For ~£6.3B

  • Parker-Hannifin Corp PH has agreed on the terms of a recommended cash acquisition of Meggitt PLC MEGGF, a global leader in aerospace and defense motion and control technologies.
  • The transaction consideration to be 800 pence in cash per Meggitt share, valuing Meggitt at ~£6.3 billion on a fully diluted basis, which is ~70.5% premium to Meggitt's share price on July 30.
  • This transaction is expected to be EPS accretive in the first full 12 months after closing, along with incremental solid sales growth, margins and cash flow accretion, high single-digit ROIC in year 5 with continued expansion, and a significant synergy opportunity of ~$300 million by the third full year.
  • Meggitt's FY20 annual revenue was ~$2.3 billion and has more than 9,000 employs. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 index.
  • This acquisition to nearly double the size of the Aerospace Systems Segment with complementary technologies for Parker-Hannifin. It will generate strong recurring revenue – adding 500 bps to the Aerospace aftermarket mix.
  • Meggitt and Parker are complementary across diverse portfolios of products. They will thus expand and develop core product lines, add new capabilities, and enable innovations on more electric, low-carbon, and other vital technologies.
  • Parker held cash and cash equivalents of $489.6 million as of March 31, 2021.
  • Price Action: PH shares are down 0.13% at $311.62, while MEGGF stock is up 56.32% at $10.16 on the last check Monday.

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