March 7, 2007, 12:01 a.m. EST

Meggitt to Buy K&F For $1.1 Billion, Debt

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By Rod Stone

LONDON – British aerospace and defense company Meggitt /zigman2/quotes/208933633/delayed UK:MGGT +0.60% PLC Tuesday said it plans to purchase K&F Industries Holdings Inc. of the U.S. for $1.1 billion plus debt, in a deal that will be partly funded by a rights issue.

Meggitt will pay $27 a share in cash and will also assume $700 million of K&F's debt. Shares of K&F closed Monday at $24.50, indicating that Meggitt is paying a 10% premium for the company.

K&F, of White Plains, N.Y., is a major maker of wheels, brakes and brake-management systems for commercial and military aircraft. It made sales of $424.1 million for 2006.

"We expect the acquisition to create material synergies and be significantly earnings enhancing in the first full year of ownership," said Meggitt Chief Executive Terry Twigger. The deal is expected to generate annualized cost savings of £16 million ($31 million) by 2009.

It will be partly funded by a 1-for-2 rights issue at 200 pence a share which will raise around £424 million, net of expenses. The balance will be funded by debt.

Separately, Meggitt said net profit for 2006 from continuing operations rose to £96.5 million from £65.5 million a year earlier. Revenue rose to £670 million compared with £616 million for 2005. Meggitt plans to pay a 2006 dividend of 6.0p a share, up 13% from 5.3p a year earlier.

Profits were driven by strong commercial aerospace markets. Meggitt makes products like engine valves, fire detectors and cockpit instruments while on the defense side it produces aerial targets and drones. The company said prospects for the civil aerospace market remain strong, with continued military demand expected.

Meggitt was advised on the acquisition by Rothschild. The deal requires approval from Meggitt and K&F shareholders as well as the relevant anti-trust authorities.

Write to Rod Stone at

UK : U.K.: London
742.00 p
+4.40 +0.60%
Volume: 667,021
Dec. 1, 2021 4:23p
P/E Ratio
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£5.74 billion
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