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(Alliance News) - UK aerospace and defence firm Meggitt on Monday said it has agreed to be taken over in a deal worth GBP6.3 billion.
Parker-Hannifin has offered 800 pence per Meggitt share in cash, representing a premium of 71% to Friday's closing price of 469.1p.
Meggitt shares were up 61% at 755p early Monday.
"Parker believes Meggitt is very well aligned with Parker and the goals of The Win Strategy, Parker's global business system, representing a unified strategic vision for its team members worldwide," said Ohio, US-based motion and control technologies firm Parker-Hannifin.
The acquisition of Meggitt nearly doubles the size of Parker-Hannifin's Aerospace Systems segment.
It has made commitments to the UK government, such as ensuring Meggitt will continue to meet its contractual obligations to the state and retaining its UK headquarters. Each of Meggitt's existing divisions will be operated under the combined Parker-Meggitt name.
Meggitt plans to recommend that shareholders vote in favour of the takeover.
Separately, Meggitt reported a 26% decline in interim revenue to GBP680.0 million, though swung to a pretax profit in the first half of 2021 of GBP33.6 million from a loss of GBP368.4 million a year ago. While noting the importance of its dividend to shareholders, Meggitt decided not to pay one for the half in light of "ongoing market conditions".
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.9% at 7,097.33
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Hang Seng: up 1.0% at 26,221.16
Nikkei 225: closed up 1.8% at 27,781.02
DJIA: closed down 149.06 points, or 0.4%, at 34,935.47
S&P 500: closed 0.4% at 4,395.26
Nasdaq Composite: closed down 0.7% at 14,672.68
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EUR: up at USD1.1867 (USD1.1858)
GBP: up at USD1.3907 (USD1.3898)
USD: down at JPY109.69 (JPY109.74)
GOLD: down at USD1,808.27 per ounce (USD1,821.81)
OIL (Brent): down at USD74.53 a barrel (USD76.29)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Monday's Key Economic Events still to come
0955 CEST Germany manufacturing purchasing managers' index
1000 CEST EU eurozone manufacturing PMI
0930 BST UK manufacturing PMI
0945 EDT US manufacturing PMI
1000 EDT US ISM manufacturing PMI
1000 EDT US construction spending
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The Chinese manufacturing sector eked out some growth in July, but saw its weakest improvement for 15 months, as businesses battle with rising input and output prices, survey data from IHS Markit showed. The headline seasonally adjusted purchasing managers' index slipped to 50.3 points in July from 51.3 in June. This left it barely above the neutral 50.0 point mark. Wang Zhe, senior economist at Caixin Insight Group, said the survey result suggested "the recovery of the economy is not yet solid" and facing "downward pressure". On Saturday, survey results from the National Bureau of Statistics showed a similar trend, as the official PMI dropped to 50.4 points in July from June's 50.9.
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The Japanese manufacturing sector continued to expand in July, having seen its strongest improvement since April as output and new orders drove its expansion, data from IHS Markit showed. The headline au Jibun Bank Japan manufacturing purchasing managers' index rose to 53.0 points in July from 52.4 in June. This signalled the joint-strongest improvement in the health of the sector since April, IHS Markit noted, reflecting a sustained recovery from the Covid-19 pandemic.
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BROKER RATING CHANGES
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JEFFERIES CUTS SMURFIT KAPPA TO 'HOLD' (BUY) - PRICE TARGET 4,400 (4,100) PENCE
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BARCLAYS RAISES UNITE GROUP TO 'OVERWEIGHT' (UNDERWEIGHT) - PRICE TARGET 1,250 (950) PENCE
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BARCLAYS CUTS TUI TO 'UNDERWEIGHT' (EQUAL WEIGHT) - PRICE TARGET 250 (300) PENCE
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COMPANIES - FTSE 100
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HSBC Holdings reported first half profit more than doubled from a year before, with its Europe and US operations returning to profit and the bank pointed to signs of personal and commercial lending growth. In the six months to June 30, the Asia-focused lender reported pretax profit of USD10.84 billion, leaping from USD4.32 billion a year before. Helping to improve the bank's interim profit was a USD719 million credit release, swung from the mammoth USD6.86 billion provision set aside in the first half of 2020 in preparation for the economic effects of the pandemic to cause loans to not be repaid. Revenue, however, slipped 4.9% to USD25.55 billion in the recent six months from USD26.75 billion a year before. Net interest margin worsened to 1.21% from 1.43%.
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SSE agreed to divest its entire stake in gas distribution operator Scotia Gas Networks for GBP1.23 billion. The power utility will sell its 33.3% stake to a consortium comprising existing Scotia Gas shareholder Ontario Teachers' Pension Plan Board and Brookfield Super-Core Infrastructure Partners. Scotia Gas includes Scotland Gas Networks and Southern Gas Networks, two of the eight regulated gas distribution networks in England, Wales and Scotland, in addition to SGN Natural Gas, which provides gas to customers in the west of Northern Ireland as well as other non-regulated ancillary businesses. SSE initially acquired a 50% equity share in Scotia Gas in 2005 for a total of GBP505 million, before selling a 16.7% stake to a wholly owned subsidiary of the Abu Dhabi Investment Authority in 2016. The consortium also has agreed to acquire the 16.7% stake in SGN owned by ADIA. This deal will conclude SSE's GBP2 billion-plus disposals programme announced in June last year, with total proceeds amounting to over GBP2.7 billion. "The disposal proceeds will reduce net debt in the short term and will help support the delivery of SSE's capital investment plans. As indicated in May, SSE will provide an update on these plans at its interim results in November," it said.
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COMPANIES - FTSE 250
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Sanne Group said it is in advanced talks with Apex over a possible buyout worth 920p per share in cash. This would represent a 53% premium to Sanne's closing share price of 603p on May 13, the day before the commencement of the current offer period. With 162.2 million shares in issue, this offer would value Sanne as a whole at just shy of GBP1.5 billion. "Having considered the possible offer, together with its financial advisers, JP Morgan Cazenove and Jefferies, the board of Sanne has indicated to Apex that the possible offer is at a value that the board would recommend," it said, adding that Apex is well advanced in its due diligence. Apex has until August 30 to either announce a firm offer for the London-based provider of alternative asset and corporate services or walk away.
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COMPANIES - MAIN MARKET AND AIM
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Life science research firm Abcam said it has agreed to buy BioVision for USD340 million. BioVision, a wholly owned subsidiary of Boai NKY Medical Holdings, is a global supplier of life science research tools to support research, diagnostics, and drug discovery. It started supplying Abcam in 2003. "Abcam customers' demand for BioVision products has grown consistently over time, with sales more than doubling over the past five years," said Abcam. The deal represents a compelling strategic fit for Abcam, it said, and will bring greater control over the innovation and distribution of BioVision's product portfolio. "BioVision has sustained strong growth over many years and, together with Abcam's brand, reach and capabilities, we are confident we are well positioned to build on this success and reinforce Abcam's ability to serve life scientists globally," said Abcam Chief Executive Alan Hirzel.
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Photo-Me International increased its annual revenue and profit guidance after a "promising" recovery in the first half. Photo-Me is an Surrey-based operator of instant-service equipment, such as photobooths and self-service laundry. Following a "promising" recovery in the first half financial year 2021, Photo-Me's trading performance in May, June and July was better than expected, driven by stronger-than-anticipated recovery of photobooth activity, mainly in Continental Europe, it said. Consequently, its has revised its expectations for the financial year ending October 31 and expects to report revenue of around GBP210 million, which would be up 13% year-on-year from GBP186.3 million but down 9.6% from pre-pandemic levels of GBP232.2 million. Previous guidance for revenue was GBP200 million.
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COMPANIES - GLOBAL
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AXA reported a surge in first half income, with the Paris-based insurer benefiting from an improved underwriting performance from its Property & Casualty unit. In the six months to June 30, AXA's net income surged to EUR4.00 billion from EUR1.43 billion. Gross revenue rose 2.8% year on year to EUR53.87 billion from EUR52.39 billion. The insurer's Solvency II ratio improved to 212% from 200%. AXA's Property & Casualty combined ratio improved 8.3 points to 93.3%, aided by the non-repeat of certain Covid claims and higher pricing and portfolio re-underwriting from its AXA XL unit. A combined ratio below 100% indicates underwriting profit.
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Jack Dorsey's Square unveiled a record USD29 billion deal to snap up Australia's fast-growing buy-now, pay-later firm Afterpay, in a major bet on the burgeoning sector, sending Afterpay's share price up 19% on Monday. The Australian fintech was founded six years ago and allows consumers to buy everything from laptops to flights in staggered payments without interest. "Square and Afterpay have a shared purpose," Dorsey – who made his billions through Twitter Inc – said announcing the deal on Sunday. "We built our business to make the financial system more fair, accessible and inclusive." Afterpay makes money by taking a commission from retailers and charging fees to late-paying customers.
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Monday's Shareholder Meetings
SigmaRoc PLC - GM re Nordkalk reverse takeover
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By Tom Waite; thomaslwaite@alliancenews.com
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