Following advice from the Ministry of Defence and the Competition and Markets Authority, and after reviewing the results of two separate consultations, Business Secretary Kwasi Kwarteng has cleared the acquisition of
www.meggitt.comMeggitt plc by
Parker-Hannifin Corp to proceed.
The announcement followed the Business Secretary consulting on steps to address the national security and competition concerns raised by the proposed acquisition of Meggitt, a UK aerospace company, by Parker-Hannifin, a US-listed company that supplies components to the mobile, industrial and aerospace markets globally.
The Business Secretary has accepted undertakings from the parties to mitigate national security risks and competition concerns. These include: ensuring that Parker will commit to honouring existing contracts while they are in place and will notify the MoD in advance if there is a material change to Meggitt’s ability to supply the MoD; reinforcing the commitment to existing List X/Facility Security Clearance site security arrangements protecting sensitive HM Government information in Meggitt, including a requirement to retain a majority of the board of directors of Meggitt as UK nationals resident in the UK; and requiring Parker-Hannifin to institute an HM Government-approved control plan to prevent International Traffic in Arms Regulations (ITAR) controls applying to ITAR-free products designed and manufactured by Meggitt.
The undertakings to mitigate the competition concerns will deliver the divestment of Parker’s aircraft wheels and brakes (AWB) division (the ‘Divestment Business’) to a purchaser approved by the Secretary of State. The Divestment Business includes, among other things: all tangible assets (including the production site of the AWB division located at Avon, Ohio, as well as the relevant inventory and equipment) and intangible assets (including intellectual property rights); all licences, permits, authorisations issued by any governmental organisation for the benefit of the Divestment Business; all contracts, leases, commitments, and customer orders of the Divestment Business; all staff currently employed by the Divestment Business, including staff seconded to the Divestment Business, shared personnel, and certain additional personnel.
Separately from the competition and national security issues, Parker-Hannifin has provided economic undertakings to the Secretary of State that will see it: continue to use the Meggitt name in combination with its own; retain Ansty Park as its UK headquarters and its centre of excellence for aerospace and advanced materials; increase R&D activity; and protect jobs.
Mr Kwarteng said these undertakings, which were voluntarily provided by Parker-Hannifin, secure the future of Meggitt and the important role it plays in the UK aerospace sector.