CLEVELAND—Cleveland-based TransDigm Group Inc. will not move forward with an offer for United Kingdom-based Meggitt P.L.C., clearing the way for Parker Hannifin Corp., to acquire the aerospace and defense supplier.
"We have long admired and studied the Meggitt business and believed that a combination between the two companies could provide value to investors of both companies," TransDigm chairman W. Nicholas Howley said in a statement. "However, based on the quite limited due diligence information that was made available and the resulting uncertainties, TransDigm could not conclude that an offer of 900 pence per Meggitt share would meet our long-standing goals for value creation and investor returns."
TransDigm, a maker of aircraft components, on Aug. 11 made a "preliminary, non-binding offer" for Meggitt of 900 pence per share, or about $9.7 billion. Earlier in August, Mayfield Heights-based Parker Hannifin, a maker of motion and control technologies, made a formal offer for Meggitt of 800 pence per share, or about $8.7 billion.
The U.K. Takeover Panel, in a ruling issued Aug. 16, gave TransDigm until Sept. 14 to announce a firm intention to make an offer for Meggitt.
TransDigm said in the Sept. 7 statement that it had "reached a memorandum of understanding with the Meggitt Pension Plan trustees, arranged the necessary financing for the acquisition ... and communicated our willingness to make commitments to (the British government) comparable to those offered by the other bidder (Parker) for Meggitt."
However, TransDigm's statement noted, "consistent with our disciplined approach to capital allocation, we make acquisitions only when we see a clear path to achieving our investment return goals with a reasonable degree of certainty," and it wasn't sure the acquisition would meet its investment goals.
Meggit shares fell on the TransDigm announcement. They stood at 742.4 pence as of 9:45 a.m. Sept. 8, down about 11.5 percent from the previous day's close.