The £6.3 billion takeover of British engineering technology firm Meggitt could result in job cuts in the UK.
Meggitt confirmed the cash offer from US rival Parker-Hannifin, which it said put a 70% premium on the share value of the FTSE 250 company.
Parker-Hannifin is committing to maintain Meggitt’s headquarters in Coventry and said it would not cut any roles in research and development, product engineering and direct manufacturing, while increasing the number of apprenticeships by 10%.
However, it added: “Parker sees the benefit of reviewing the ways in which the operations of the combined group can be further improved, which may impact employment roles within the organisation.
“Parker anticipates overlap between the two businesses, particularly in central corporate and support functions and a reduced need for roles currently supporting Meggitt’s status as a public listed company at Meggitt’s UK headquarters.
“The acquisition may give rise to operational economies of scale and opportunities for commercial benefits, which will be assessed as part of the evaluation and may result in headcount reductions or relocation of Meggitt employees.”
Meggitt employs more than 9,000 people in 14 countries. The company was forced to cut 1,800 jobs due to the impact of COVID-19 on the travel sector and had already announced a consolidation plan which includes site closures. Parker said it would continue with these plans despite the company returning to profit in the first half of 2021.
The deal for Meggitt, a supplier to the UK government, would see Parker almost double its aerospace operations.
“Meggitt is one of the world’s foremost aerospace, defence and energy businesses, leading the market with a strong portfolio of technology and manufacturing capabilities, and holding a significant amount of intellectual property,” said the Meggitt chairman Sir Nigel Rudd.
“While Meggitt is currently pursuing a strong, standalone strategy which will deliver value to shareholders over the long term, Parker’s offer provides the opportunity to significantly accelerate and de-risk those plans, while continuing to deliver for shareholders.”
Tom Williams, chairman and chief executive of Parker-Hannifin, said: “We are committed to being a responsible steward of Meggitt and are pleased our acquisition has the full support of Meggitt’s board.
“We fully understand these responsibilities and are making a number of strong commitments that reflect them.
“During our longstanding presence in the UK we have built great respect for Meggitt, its heritage, and its place in British industry.”
A spokesperson for the Department for Business said: “The government is closely monitoring the proposed acquisition of Meggitt by Parker Hannifin.”