GE Says Will Buy Italian Avio for $4.3 bn
The U.S. industrial group General Electric said on Friday that it would buy the aviation activities of Italian engine maker Avio for $4.3 billion (3.3 billion euros), while Avio's space unit will stay with the company's present owners, the investment fund Cinven and aerospace company Finmeccanica.
A GE statement said that the acquisition would bolster its position in jet propulsion, and "will strengthen GE’s global supply chain capabilities as its engine production rates continue to rise to meet growing customer demand."
GE also expects the deal to reinforce its profit margins, the statement said.
It quoted GE president and chief executive David Joyce as saying: "Avio has technologies, capabilities and outstanding engineers to help grow our business."
Avio has worked with GE since 1984, supplying components for several of GE's jet and helicopter engines, and the U.S. group said it was now in a position to "create additional opportunities to offer Avio’s products and services beyond the aviation industry."
Finmeccanica said that it plans to use the 260 million euros that it will make on the sale to pay off debt. The sum represents roughly twice what Finmeccanica paid for its Avio stake in 2006.
The move is "an important first step in an already announced plan of holding sales," Finmeccanica added.
Cinven and Finmeccanica also said that they would now work on establishing industrial alliances to ensure "the long-term competitiveness" of Avio's space propulsion unit, which makes components for rocket engines, including lateral boosters for the European Ariane 5 launcher.
GE is already present in Italy, where it employs more than 7,000 people at more than 20 locations, including a research and development centre.
Avio employs 5,300 staff, of which some 4,500 are in Italy.
GE is one of the world's leading makers of jet engines, and also works closely with the French group Safran.