company Smith Group agreed to sell its Aerospace division Smith
Aerospace to General Electric Company 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 Honeywell. 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