The Government should take “golden shares” in defence companies critical to UK national security such as Meggitt to stop them falling to foreign predators, MPs on the Defence select committee have said.
The call comes as concern mounts about the £6.5bn takeover of the FTSE 250 company by US rival Parker Hannifin .
Tobais Ellwood, the committee chairman, called for an expansion of the system in which the Government holds a controlling share that can be used to block takeovers .
"Look at the list of competencies that Meggitt has – advanced composites, avionics, sensors … you can easily argue Meggitt has every qualification to be treated the same as golden share companies BAE Systems and Rolls," he said.
"If we are going to utilise the golden share mechanism, there is a strong argument it should be expanded to other important companies that make critical contributions to UK security."
Mark Francois, the former armed forces minister and another MP on the Defence committee, said: "If you project this forward only Rolls-Royce and BAE, because of the golden shares, and possibly Babcock, could be left – everything else could be sold overseas."
The Government only has golden shares in BAE Systems and Rolls-Royce, although there are similar controls relating to Babcock's Devonport and Rosyth shipyards that maintain much of the Royal Navy, including Trident submarines.
On Monday US-based Parker revealed an 800p a share offer for Meggitt, which supplies parts for both military and civil aircraft.
Its board recommended the all-cash offer, which is at 71pc premium. The chairman, Sir Nigel Rudd, said he was confident Parker would be a "responsible steward of Meggitt".
Tom Williams, the Parker chief executive, has spelled out one-year undertakings to protect Meggitt's 9,000 staff , of whom about a quarter are in the UK.
However, there are concerns jobs will be lost and Britain's high tech defence industrial base will be further hollowed out if the deal is backed by investors.
Two years ago US private equity firm Advent bought Cobham, and has since sold 70pc of its defence and aerospace businesses. Cobham is now trying to buying Ultra Electronics , which makes sonar systems for the Royal Navy.
The Business Secretary, Kwasi Kwarteng, is "closely and actively monitoring" both the Meggitt and Ultra deals. The Telegraph understands he is pushing Parker for longer guarantees to protect Meggitt's UK operations.
However, the significant premium being offered by Parker may be too good to Meggitt investors to ignore given the company has been hammered by the collapse of air travel during the pandemic.
One leading shareholder said: "The price is finely judged given the civil aerospace cycle."
While at a 71pc premium to the previous week's share price, Parker's offer is only 15pc above where Meggitt's shares were pre-pandemic.
Paul Killik, whose Killik & Co firm administers assets of £8bn and has clients holding £2.5m in Meggitt shares, said: " Our defence sector is being hollowed out – these are irreplaceable businesses, among the crown jewels of British technological knowhow.
"The fund managers who collectively own Meggitt won't stop its takeover, not if they are being offered such a premium. Bidders can afford to offer irresistible premiums because London-listed stocks are so cheap at the moment."
Parker said: "Recognising the importance of Meggitt's rich UK heritage and relationships with its key stakeholders, we have agreed with Meggitt a number of legally binding commitments to HM Government."
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