Component maker Meggitt Plc initiates $1.1 billion takeover of K&F Industries

Wimborne, UK: Meggitt Plc, a maker of components for Eurofighter combat jets as well as engine sensors and airconditioning system valves for Airbus and Boeing Co, has agreed to buy K&F Industries Holdings Inc. for $1.1 billion. The acquisition will see Meggitt adding braking systems, which K&F supplies to Bombardier Inc and Embraer, to its overall business.

As per the terms of the deal, K&F investors will receive $27 in cash for each share, 10 per cent more than yesterday's closing price of White Plains, New York-based K&F's shares.

According to Meggitt chief executive officer Terry Twigger, profits for 2006 of his Wimborne, England, based company rose 47 per cent on increased sales of engine sensors and air- conditioning system valves for Airbus SAS and Boeing Co. airliners. He said that the acquisition of K&F, which provides wheels and brakes for Bombardier's Challenger 605 corporate jets, would boost earnings this year. The acquisition will add K&F's steel-brake technology to Meggitt's carbon-based braking system. According to Twigger, the acquisition offers Meggitt the chance to have a bigger international footprint.

Net income at Meggitt last year went up by 96.5 million pounds, from a restated 65.5 million pounds in 2005, the company said in a separate statement. Sales increased 9 per cent to 670.3 million pounds.

The company supplies fire-detection systems for Airbus's planned 555-seat A380 airliner and brakes, wheels and air-data components for the Eurofighter built jointly by Airbus's parent, European Aeronautic Defence & Space Co., BAE Systems Plc and Finmeccanica SpA.

Planes equipped with K&F's brakes include Airbus's A321 single-aisle airliner, Empresa Brasileira de Aeronautica SA'S Phenom 100 corporate jet and the competing Falcon 900EX, 900DX and 7X business jets from Dassault Aviation SA. K&F also makes fuel tanks for commercial and military planes, including a project to upgrade the US B-52 bomber fleet.

K&F's net income tripled last year to $54.3 million from $14.7 million as sales went up 10 per cent to $424.1 million, K&F said in a statement on Feb. 15.

Meggit's buyout of K&F comes even as it has been the subject of press speculation that it was a takeover target itself from the likes of Lockheed Martin Corp. and Boeing.