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Meggitt takeover advisors set to rake in £200m in bumper payday

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SVERDLOVSK REGION, RUSSIA  AUGUST 14, 2021: A Mikoyan-Gurevich MiG-15UTI jet training aircraft, a Soviet Myasishchev M-4 strategic bomber (NATO reporting name Bison), and a Tupolev Tu-16LL flying laboratory, from left, on display at the museum complex of the Ural Mining and Metallurgical Company (UMMC) during Russian Air Force Day celebrations. Donat Sorokin/TASS (Photo by Donat Sorokin\TASS via Getty Images)
The Meggitt takeover would be one of the biggest aerospace deals in recent years. Photo: Donat Sorokin\TASS via Getty Images

The bankers and lawyers shepherding the defence-sector takeover of Meggitt (MGGT.L) by US bidder Parker-Hannifin (PH) are set to rake in around £200m ($277.2m) in fees. 

The group agreed a £63bn takeover offer from US-based engineer Parker-Hannifin in early August, in the latest example of corporate America's appetite for British companies.

According to documents released on Monday morning which reaffirmed the bid, Citibank (C) is set to be paid £59m from lending money on the Parker side of the deal. 

The documents showed that on Meggitt’s side Rothschild, Morgan Stanley (MS) and Merrill Lynch will share £43m. A pot of at least £35m is also set to go to legal advisors.

A date of 21 September has been set for a shareholder vote on the Parker offer. 

Meanwhile, the takeover is heating up with other offers in the pipeline, with yet more foreign money headed for UK companies. 

Following Parker-Hannifin's offer, last week US aircraft components and systems maker TransDigm (TDG), swooped in at a possible 900 pence per share, higher than Parker-Hannifin's 800 pence level.

At the time industry-watchers called the counter-offer remarkable, due to the high price. 

The acquisition of Meggitt would nearly double the size of Parker's aerospace systems segment.

Under the terms of the deal, Meggitt will still be headquartered in the UK, with majority UK national board members.

Read more: FTSE heads lower following disappointing Chinese data

It will also hold to Meggitt's commitment to commit to reduce net carbon emissions by 50% by 2025 and achieving net zero greenhouse gas emissions by 2050 across the existing Meggitt business.

Meggit said in its interim results earlier this month that defence spending in the UK remained robust and is forecast to be up 6% in 2021, with the outlook for defence spending in the EU also solid. In the US, defence spending is expected to exceed the $2tn mark.

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