U.K. clears Parker Hannifin's $7.7 billion purchase of aerospace and defense company Meggitt

MAYFIELD HEIGHTS, Ohio—The United Kingdom government has given the official go-ahead for Parker-Hannifin Corp.'s $7.7 billion acquisition of aerospace and defense company Meggitt P.L.C.

"We are pleased to have reached this important clearance milestone from the U.K. Secretary of State," Tom Williams, Parker's chairman and CEO, said in a statement. "We have also agreed to substantial legally binding commitments, which underscore our deep commitment to the U.K. As we move closer to the completion of the acquisition and the combination of these two strong businesses, we look forward to welcoming the Meggitt team to Parker."

Business Secretary Kwasi Kwarteng said approval of the deal follows review of advice from the U.K. Ministry of Defence and the Competition and Markets Authority.

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The deal was scrutinized by the government "over competition and national security concerns, as Meggitt's customers include Britain's Ministry of Defence, Boeing, Airbus and Rolls-Royce," the Reuters news service noted.

Mayfield Heights-based Parker, a maker of motion and control products, supplies components to the mobile, industrial and aerospace markets globally. The boards of Parker and Meggitt in August 2021 approved the all-cash acquisition by Parker. 

Kwarteng's announcement said his department had accepted "undertakings" from Parker to mitigate national security risks and competition concerns, and that the assurances "secured the future of Meggitt and the important role it plays in the U.K. aerospace sector."

Parker said it "has signed legally binding economic commitments with the U.K. government" that include maintaining the following for five years after the deal's close:

• Meggitt's headquarters and its aerospace and advanced materials center of excellence in Ansty Park, in Coventry, U.K.;
• Meggitt's "key areas of existing operational capability" in the U.K.; research and development (including product engineering) and manufacturing labor headcount in the U.K.;
• Meggitt's sustainability targets of reducing net carbon emissions by 50 percent by 2025 and achieving net-zero greenhouse gas emissions by 2050; and
• Contractual obligations regarding supply of goods and services to the U.K. government.

The company also agreed to increase Meggitt's R&D expenditure in the U.K. by at least 40 percent, and its U.K. apprenticeship opportunities by 20 percent.

Parker said it continues to expect the acquisition to close in the third quarter of 2022.

In May, Parker reached an agreement to sell its Avon-based Aircraft Wheel and Brake Division in a move required to resolve concerns about overlapping activities with Meggitt and to close the acquisition. The buyer, Kaman Corp. of Bloomfield, Conn., a manufacturer of components and materials for aerospace and defense, industrial and medical markets, is paying $440 million for the division.

The European Commission in April cleared the Meggitt deal, with one of the deal conditions being the divestment of the Aircraft Wheel and Brake Division. The U.K. government also said Parker has pledged to honor existing contracts to its defense ministry and agreed to protect sensitive government information.