The Meggitt (MGGT) share price will be in focus after the UK government announced that it will take a keen interest in the firm’s acquisition. The stock is expected to pare back some of the 56% gains made on Monday.
Meggitt news. Meggitt is a leading defense contractor in the UK. The firm sells products to companies like advanced composites, condition monitoring, cameras, and engine systems to companies like Boeing, Airbus, and BAE Systems.
The Meggitt share price jumped by more than 56% on Monday after the company announced that it would be acquired by Parker Hannifin, a US-based company. The price tag for the acquisition was about 7.1 billion pounds or 800p pe share.
In a statement, Kwasi Erteng said that the government would scrutinize the deal to see whether it threatened the country’s security. Just last week, he said that the government would intervene to stop the proposed acquisition of Ultra Electronics by Cobham.
There are concerns in the UK about the ownership of the company, which forms a major part of the country defense sector. There are also concerns about jobs, with the Telegraph reporting that some of its more than 9,000 UK employees could be at risk. Still, in a statement, Parker said that it would commit not to have layoffs. It also pledged to maintain its headquarters in the UK.
The Meggitt acquisition comes at a time when the number of UK company takeovers has increased. Just last month, private equity firms announced that they would acquire Morrison’s, the third-biggest supermarket chain in the UK.
Meggitt share price forecast
The chart below shows that the Meggitt stock price popped by more than 56% on Monday after the deal was revealed. It rose to an all-time high of 757p.
Now, with the government threatening to block the transaction, there is a possibility that the stock will retreat slightly in the next few days. If this happens, the next key level to watch will be around 700p. Still, the stock could show some volatility as investors wait for the outcome of a government review. You can read my previous MGGT shares prediction here.
Correction. A previous version of this article indicated Meggitt’s ticker as MGT. That has been corrected.
