Meggitt in pounds 237m takeover of US manufacturer

MEGGITT, the fast-growing aerospace components group, yesterday unveiled its biggest takeover to date - the pounds 237m acquisition of a US manufacturer of airline smoke-detection systems.

The purchase of the California-based Whittaker group is being part-funded by a two-for-nine rights issue at 160p to raise pounds 68m and will increase Meggitt's size by nearly a third.

More significantly, it will extend Meggitt's presence on the Airbus programme where Whittaker is a major supplier of equipment. The takeover will also lift Meggitt's workforce to 4,600, of which 40 per cent are in the US, and boost sales from pounds 293m last year to nearly pounds 400m in the coming year.

Apart from balancing Meggitt's civil aircraft order book more evenly between Boeing and Airbus, it will also raise the proportion of turnover accounted for by the aerospace sector to 55-60 per cent.

Meggitt expects to achieve cost savings of pounds 4.7m in the first full year of ownership but said the deal would be earnings enhancing even before these savings. Analysts expect earnings to rise by 12-13 per cent.

The deal follows four smaller acquisitions last year, the largest of which was the pounds 44m purchase of Vibro-Meter, a manufacturer of vibration monitoring systems for aircraft engines.

Terry Twigger, finance director, said the group aimed to lift its market capitalisation from pounds 440m now to about pounds 750m in two years. Although the rights issue was launched at a 14 per cent discount to Meggitt's opening price, the shares rose 5 per cent to 194.5p.