“General Electric Co. GE +0.67% is on the verge of agreeing to a deal to buy Italian aerospace group Avio SpA for as much as €3 billion ($4 billion), according to people familiar with the negotiations.
GE and European private-equity firm Cinven, which owns Avio, are aiming to announce a deal Thursday, the people said, though it still could be derailed at the last minute. The acquisition would be valued at between €2.5 billion and €3 billion, the people said.
The Italian company makes components for commercial and military jet engines as well as propulsion systems for satellite launch vehicles. One issue that still needs to be sorted out before a deal is signed involves Avio’s space business. According to a person familiar with the matter, GE isn’t interested in acquiring that operation as part of the deal, and the two sides are working to structure it accordingly.
Two-thirds of Avio’s aviation business is with GE, helping to explain why the U.S. industrial conglomerate is the front-runner to buy the company. Ahead of a big manufacturing ramp-up to meet record orders for new engines over the next five years, GE is seeking to strengthen its supply chain, in part by bringing the manufacturing of some parts in-house. Avio, which has worked with GE for decades, makes components for the U.S. company’s GE90 and GEnx engines, as well as for helicopters and other products….”
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