The British company Smith Group agreed to sell its Aerospace division Smith Aerospace toCompany for US$4.8 billion. The Sale is targeted for completion during the second quarter of 2007. Under a separate move, Smith Detection and GE will establish a joint venture aiming at the homeland security market.
According to .Smiths’ chief executive Mr Butler-Wheelhouse , increased capital requirements and the growing importance of supplier scale, especially as the next generation of large programs kicks in were the drivers for the decision to sell the avionics group.
In 2001 the European Union blocked a similar move by GE – the acquisition of. The current acquisition is expected to meet less obstacles as the two companies are complementing each other in their activities. GE Chairman and CEO Jeff Immelt said he is looking forward to a constructive process with EU antitrust regulators. “GE and Smiths fit together well because our product offerings are complementary and because we have similar customers and deep domain expertise in this industry.” said GE Chairman and CEO Jeff Immelt. Smiths Aerospace demonstrated continued strong growth in the growing aerospace and defense market. GE plans to add Smith’s flight management systems, electrical power management, mechanical actuation systems and airborne platform computing systems to its offerings to the commercial and military aviation markets. “This acquisition is consistent with our strategy to invest in high-technology infrastructure businesses that deliver strong growth, earnings expansion and higher margins” Immelt said. “GE Aviation is growing about 10% 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.”
In a parallel move, GE and the Smith Group signed today a letter of intent with creating a joint venture including GE Security’s Homeland Protection business and Smiths Detection. Upon completion of the transaction, GE will own 36% and Smiths 64% of the joint venture and both companies will have board representation, with Smiths having a majority. The joint venture, to be called Smiths GE Detection, will be headquartered in London. Keith Butler-Wheelhouse will serve as the chairman of the board. Stephen Phipson, currently group managing director of Smiths Detection, will serve as the president.