UK headquartered conglomerate Smiths Group plans to sell Smiths Aerospace to General Electric for $4.8 billion and hopes to complete the transaction in this year’s second quarter.
Smiths Group says in a statement today that the sale of the Smiths Aerospace division to GE for $4.8 billion is subject to approval Smiths Group shareholders as well as from anti-trust regulators in Europe and the USA.
But it says it hopes the approvals will be forthcoming in time to complete the sale in the second quarter of 2007 and that £2.1 billion ($4.1 billion) will be returned to shareholders.
GE has agreed to pay Smiths Group $110 million compensation if the sale fails to gain regulatory approval “due to GE’s failure to use reasonable endeavours” to gain the regulatory approval, while Smiths Group has agreed to pay GE $110 million compensation if Smiths Group shareholders fail to vote in favour of the sale.
Smiths Group says it is selling the aerospace division so the group can invest in other areas, boost overall margins plus the sale is due to changes in the aerospace industry.
“The structure of the aerospace industry is changing”, particularly in terms of “increased capital requirements and growing supplier scale”, it says.
“By selling [Smiths] Aerospace, we crystallise the value for our shareholders.”
“At the same time we know that the business is going to a great owner,” it adds.
In today’s statement, Smiths Group says the aerospace division made an operating profit of £156 million on turnover of £1.3 billion in the 53 weeks ending 5 August 2006.
In a separate statement today, Smiths Group says one of its other divisions, Smiths Detection, has signed a letter-of-intent with GE to form a new joint venture company called Smiths GE Detection, which will provide security products and services.
Smith Aerospace has two business units, aerospace systems and aerospace units, and its product and service offering includes digital, electrical and mechanical power systems for commercial and military aircraft plus it provides components, particularly to engine manufacturers.
GE has several aviation businesses including GE Engines.
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Source: FlightGlobal.com
