London – General Electric Co., the world’s largest aircraft-engine maker, agreed Monday to buy the aerospace business of Smiths Group PLC, Britain’s third- largest aerospace company, for $4.8 billion in cash.
Smiths will return $2.1 billion to shareholders, the London-based company said in a statement. GE and Smiths also announced plans for a joint venture called Smiths GE Detection.
The market reacted enthusiastically, pushing Smiths shares up more than 15 percent to $22.24 on the London Stock Exchange. The company has been under shareholder pressure to break itself up but has resisted.
Fairfield, Conn.-based GE said the purchases would broaden its aerospace portfolio by adding Smiths’ flight-management systems, electrical-power management, mechanical actuation systems and airborne platform computing systems.
“GE Aviation is growing about 10 percent a year, and this acquisition gives us a technology growth platform that will be accretive to our net income and will deliver immediate and future value for our investors,” GE chairman and chief executive Jeff Immelt said in the statement.
Smiths Aerospace has more than 11,000 employees and posted revenue of $2.4 billion in 2006. It has been working on projects such as Boeing’s 787 aircraft, the Airbus A380 and the Joint Strike Fighter military project.
Smiths will call an extraordinary shareholders meeting during the second quarter to approve the sale, which is subject to regulatory approval.
Speaking in a conference call with reporters, Immelt said the acquisition complemented GE’s existing business instead of being a consolidation, and he looked forward to “a constructive process” with EU antitrust regulators. The European Union blocked GE’s attempt to take over Honeywell in 2001, although the deal had been approved by U.S. regulators.
