Meggitt’s New CEO Keen on M&A Should Sequestration Damp PricesRobert Wall
Meggitt Plc, the largest provider of wheels and brakes for military aircraft, said it’s ready to make purchases following any decline in the price of aerospace assets that may result from looming U.S. cuts in the defense budget.
Meggitt would be comfortable spending more than 500 million pounds ($760 million) on a transaction, Stephen Young, the Christchurch, England-based company’s incoming chief executive officer, said today in a telephone interview.
“If we could find a suitable acquisition at the right price then we would do that,” said Young, who is currently chief financial officer. “There were some silly prices paid in 2012.”
Meggitt boosted pretax profit 12 percent to 362.8 million pounds last year, spurred by record output at Airbus SAS and Boeing Co. and the $685 million purchase of Pacific Scientific Aerospace, a maker of generators and electric motors, in 2011. Net debt fell 19 percent to 642.5 million pounds 2012, helping to pave the way for future acquisitions.
Meggitt rose as much as 4.6 percent are was trading up 3.4 percent at 474.70 pence as of 10:36 a.m. in London. The stock gained 24 percent this year for a value of 3.7 billion pounds.
“We would tend to buy capabilities and the product would go on both civil and military aircraft,” said Young, who takes over as CEO from Terry Twigger on May 1.
U.S. spending reductions effective March 1 will trim sales by about 2 percent this year, Meggitt said. Excluding the impact on defense markets of the across-the-board budget cuts, known as sequestration, and any takeovers, the company envisages “mid-single-digit” sales growth. Revenue rose 10 percent last year.
To deal with the military slowdown, Meggitt will shift personnel to satisfy growing commercial demand, holding off on hirings that its civil activities would otherwise warrant.