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Battle for Meggitt Shows Bigger-Is-Better Is Back in Aerospace

The bidding war over a maker of airplane wheels and fire-detection systems may herald a fresh wave of consolidation in the aerospace sector.

relates to Battle for Meggitt Shows Bigger-Is-Better Is Back in Aerospace
Illustration: George Wylesol for Bloomberg Businessweek

Meggitt Plc, a U.K.-based aerospace and defense supplier, agreed earlier in August to sell itself to Parker-Hannifin Corp. for about $10 billion including the assumption of debt. The ink was barely dry on the press release before another aerospace company, TransDigm Group Inc., topped Parker-Hannifin’s bid by about $1 billion. Meggitt is reviewing the TransDigm offer, which the company must formalize by Sept. 14 under U.K. takeover rules if it wants to proceed.

Public bidding wars are rare in aerospace, and this one feels particularly aggressive at a time when the industry is recovering from the effects of the Covid-19 pandemic. Parker-Hannifin’s bid valued Meggitt at a premium to its pre-Covid high, and TransDigm’s proposal pushed the valuation even higher. Meggitt would represent the largest-ever takeover by far for either of its would-be acquirers, and each would have to take on a substantial amount of debt to see the deal through, potentially to the detriment of its credit ratings.