The £ 6.3 billion US acquisition of British defense firm Meggitt is ready to pass after the government says it is likely to accept national security concessions.
The Department for Business, Energy and Industry Strategy (BEIS) said Secretary of Commerce Kwasi Kwaten “willing to accept” the proposal proposed by Parker Hannifin to meet government concerns about the deal.
Meggitt manufactures brakes for use on more than 70,000 civilian and military aircraft and supplies parts to RAF Typhoon jet fighters. In a series of proposals, Parker said he would respect existing contracts while they were in place and would notify the Pentagon in advance if Meggitt could not deliver supplies.
It reiterates Meggitt’s commitment to protect sensitive government information and ensures that British citizens residing in the United Kingdom make up the majority of the company’s board of directors.
The Ohio-based company will also establish a control plan approved by Westminster to prevent regulations on the International Traffic in Arms Regulations (ITAR) that apply to Meggitt.
ITAR is a US regulation governing the export of defense items and services.
Approximately 2% of Meggitt’s sales come from a contract with the Department of Defense, which employs more than 2,000 people in the United Kingdom.
The Department for Business, Energy and Industry Strategy (BEIS) has begun two consultations on Parker Hannifin’s proposal. Kwasi Kwaten will make the final decision on the transaction after the talks are closed on 13 July.
Parker Honeyfin, a supplier of the US mobile, industrial and aerospace industries, first announced an agreement in August 2021 to acquire Coventry-based Meggitt.
The sale of Meggitt is one of the US acquisitions in the UK defense industry, many of which raise national security concerns.
Kwasi Kwaten announced last week that it would approve the £ 2.6 billion acquisition of Ultra Electronics, which manufactures secret parts for nuclear submarines, in line with bidder Advent International’s pledge.
The United States had previously threatened to limit defense cooperation if Britain blocked the deal.
Earlier this week, Telegraph revealed that Advent plans to dissolve Ultra and sell its non-defense business as soon as the deal closes.
Ultra is the second major British defense company acquired by Advent after the acquisition of aerial refueling system maker Cobham.
The Boston-based group fired after offloading part of Kobam, despite making a promise of “good caretaker” in 2019.
The sale of Meggitt is the last acquisition to be considered under the Corporate Act of 2002. Earlier this year, stricter rules were introduced that empower ministers to intervene in transactions for national security reasons.
Parker Hannifin’s acquisition by Meggitt was approved by the European Commission earlier this year for competitive reasons.