General Electric Co, the world's biggest jet-engine maker, has agreed to buy Smiths Group Plc's aero-space business for US$4.8 billion amid record demand for commercial aircraft.
The purchase of the Smiths unit, which makes electronic controls, is subject to approval by Smiths shareholders and regulators, Fairfield, Connecticut-based GE said yesterday in a statement. Smiths plans to return ?2.1 billion (US$4.12 billion) to shareholders, the company said in a separate statement.
Chief executive officer Jeffrey Immelt wants to tap surging orders for Boeing Co and Airbus SAS aircraft parts amid rising travel overseas and plans by the US military to develop new planes. The purchase would give GE some of the breadth it failed to get when the EU rejected its US$45 billion bid for Honeywell International Inc in 2001.
"Smiths might make some real sense for GE," Teal Group ana-lyst Phil Finnegan said before the announcement.
The Smiths business competes in some areas with Honeywell, Goodrich Corp, United Technologies Corp's Hamilton Sundstrand unit and Rockwell Collins Inc.
Smiths in the past two years faced pressure from investors after the company's results missed some forecasts, Credit Suisse analysts including Steve East said in November. Smiths had a second-half loss of ?109.3 million after writing off an investment in auto parts maker TI Automotive Ltd.
GE shares fell US$0.03 to US$37.89 on Friday on the New York Stock Exchange trading. They gained 6.2 percent last year. US markets were closed yesterday for the Martin Luther King Jr holiday. Smiths rose ?0.01 to ?9.85 in London on Friday.
Smiths will also form a joint venture with GE to combine the pair's detection and homeland-protection assets, the UK company said separately. Smiths GE Protection will be 64 percent-owned by Smiths and chaired by its CEO Keith Butler-Wheelhouse.
GE plans to buy about US$7 billion in non-financial assets this year, Immelt said at a meeting last month with analysts.
Immelt has spent almost US$70 billion on acquisitions since taking the helm in 2001, and people familiar with the talks said last week that he is seeking as much as US$10 billion in an auction of GE's plastics unit.
Analysts including Merrill Lynch & Co's John Inch and Credit Suisse's Nicole Parent said he may funnel some of the proceeds into more acquisitions.
Last week she identified aero-space as one possible market, and analysts said Immelt's US$7 billion goal excludes any purchases made with the plastics sale proceeds.
Chicago-based Boeing this month said orders reached a record last year, the second straight record-setting year at the world's second-largest maker of commercial planes.
The industry is benefiting from demand in Asia and the Middle East, where the number of first-time air travelers is growing along with regional economies and airline deregulation. The Smiths aerospace business won't peak until 2009 "at the earliest," Credit Suisse said.
Smiths also has no overlap with GE's products. The company is developing computer systems and equipment for Airbus' A380 superjumbo jet and Boeing's fuel-efficient 787 model and its 767 military refueling tanker. Smiths also makes military airframes and compon-ents, including some for Lockheed Martin Corp's F-35 plane, formerly known as the Joint Strike Fighter.
The unit also makes propellers, refueling equipment, landing gear and electromechanical systems and structures.
GE, also the world's biggest aircraft lessor, may have an easier time going before the European Commission this time than it did with Honeywell. That's because the Court of First Instance -- the avenue for appeal -- said in 2005 that the EU was in error in using an argument for "conglomerate" effects used by then commissioner Mario Monti, opening the way for aerospace acquisitions by GE. The appeals court upheld the rejection of the Honeywell deal.
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
RSS