UK government let off intervention hook

Boris Johnson stands next to a Typhoon fighter jet in Moray, Scotland, Britain, July 23, 2020. Andrew Milligan/Pool via REUTERS

LONDON, Sept 7 (Reuters Breakingviews) - TransDigm’s (TDG.N) retreat read more from the $8.7 billion battle for British aerospace engineer Meggitt (MGGT.L) gets Boris Johnson out of a potentially tight corner. The Ohio-based defence company said it had eased the concerns of potentially awkward parties like Meggitt’s pension trustees and had the funds in place to support its 900 pence per share bid, a 92% premium to Meggitt’s undisturbed share price. Its stated desire to look deeper into Meggitt’s books, however, suggests nerves on the part of its financial backers.

TransDigm’s banks could be forgiven some sweaty palms. Assuming it borrowed all the cash, its net debt would have ballooned to 8.5 times the combined group’s EBITDA next year, according to Breakingviews estimates. That leaves no margin for error. Had TransDigm persisted and Meggitt’s board acquiesced, Johnson’s administration, which was after assurances on UK jobs and R&D spending, would have had to decide whether to roam far off the regulatory piste and rule on the quality of TransDigm’s credit. (By Ed Cropley)

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Editing by George Hay and Oliver Taslic

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