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General Electric Company (NYSE:GE) announced today that it agreed to purchase Smiths Aerospace, a U.K.-based supplier of integrated systems for aircraft manufacturers and components for engine builders, for $4.8 billion in cash. The deal is subject to approval by Smiths Group shareowners as well as customary regulatory reviews.The acquisition will broaden GE’s offerings for aviation customers by adding Smiths innovative flight management systems, electrical power management, mechanical actuation systems and airborne platform computing systems to GE Aviation’s commercial and military aircraft engines and related services.
GE Chairman and CEO Jeff Immelt said, “Smiths Aerospace is a world-class business and a great extension of our Aviation business. Like GE, Smiths has built its business by investing in technology and innovative products and services. 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.
“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.”
Smiths Aerospace, which is part of Smiths Group, has more than 11,000 employees and had $2.4 billion in revenues in 2006. Smiths has a significant presence on most commercial aircraft, including the Boeing 737 and Airbus A320, as well as many military aircraft. More importantly, Smiths has a major presence on new aircraft such as the Boeing 787, Airbus A380 and the Joint Strike Fighter.
Smiths products include flight management systems, airborne platform computing systems, power generation, conversion and distribution products, actuation products and systems for flight control, thrust reversers and landing gear applications, various engine components and a global customer services organization.
Smiths Group Chief Executive Keith Butler-Wheelhouse said, “The Board of Smiths Group is delighted to have reached agreement on the sale of Smiths Aerospace to GE. The consideration reflects the future potential of Smiths Aerospace, which has been created by intense investment in technology over the past five years and by the successful efforts of the dedicated Smiths Aerospace employees.”
GE Aviation is headquartered in Evendale, Ohio, has 26,800 employees and had $13.2 billion in revenues in 2006. Its products include jet engines for civil and military aircraft, as well as aeroderivative engines for marine applications. GE Aviation also operates a worldwide network of engine services facilities.
GE Aviation President and CEO Scott Donnelly said, “The acquisition will broaden our collective expertise. Smiths has made significant investments in its aerospace technologies with resulting success on several exciting new aircraft. Together, we will bring greater product scope and value to our customers.”
Detection Joint Venture
GE also announced today that it has signed a letter of intent with Smiths Group to create a detection joint venture with a portion of its Security business. The JV will include 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 definitive agreement is expected to be signed in the second quarter. The transaction will be subject to approval by Smiths shareowners as well as customary regulatory reviews and will be conditioned on the completion of GE’s acquisition of Smiths Aerospace.
Louis Parker, President and CEO, GE Security, said, “Today’s announcement is a big step in aligning our detection team with a business that has complementary technologies and creates a joint venture that will be able to offer a full-service suite of detection solutions on a global basis.”
Immelt said, “We continue to believe security is a great long-term growth opportunity for GE. We have deep technical expertise and are experiencing strong growth in our security platform. This joint venture enhances our long-term position in the industry.”
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.
Keith Butler-Wheelhouse said, “Together we are creating a world-class business. GE’s Homeland Protection business has a terrific leadership team, committed employees and exciting technology. Our combination of technologies will result in the development of more effective products and services to help make the world a safer place.”
Smiths Detection is headquartered in London, U.K., has about 2,000 employees and had about $700 million revenues in 2006. GE Homeland Protection is headquartered in Newark, CA, has about 700 employees and had about $300 million in revenue during the year.
A presentation for analysts and investors by Keith Butler-Wheelhouse and Jeff Immelt will be held at 9:30 a.m. UK time (4:30 a.m. ET) at the Savoy Hotel, Strand, London WC2R OEU. The event will be webcast live at www.smiths.com. Alternatively, interested parties can listen in live by calling +44 (0) 20 7138 0816 or +1 718 354 1171.
A joint media conference will be hosted today at 11:30 a.m. (UK time) at the Savoy Hotel. Also, an interview with Keith Butler-Wheelhouse and Jeff Immelt can be seen on www.Cantos.com
About GE
GE (NYSE: GE) is Imagination at Work -- a diversified technology, media and financial services company focused on solving some of the world’s toughest problems. With products and services ranging from aircraft engines, power generation, water processing and security technology to medical imaging, business and consumer financing, media content and advanced materials, GE serves customers in more than 100 countries and employs more than 300,000 people worldwide. For more information, visit the company's Web site at www.ge.com
About GE Aviation
GE-Aviation is one of the world's leading producers of large and small jet engines for commercial and military aircraft. We also supply aircraft-derived engines for marine applications and provide aviation services. For more information, visit www.geaviation.com
About GE Security
GE’s Security business is a wholly owned subsidiary of the General Electric Company (NYSE: GE) focused on communication and information technologies for security and life safety solutions. GE Security has more than 6,500 employees with operations in over 35 countries and is represented by some of the best-known brand names for intrusion and fire detection, access and building control, video surveillance, explosives and drug detection, key management and structured wiring. The Homeland Protection business is focused on explosives and narcotics detection and has approximately 730 employees located in the U.S., Europe and Asia. For more information, visit www.gesecurity.com
About Smiths Group
Smiths is a global technology company, listed on the London Stock Exchange. Smiths Group is a world leader in the practical application of advanced technologies. Its products and services make the world safer, healthier and more productive. Smiths Group has four divisions: Aerospace, Detection, Medical and Specialty Engineering. It employs 32,000 people and has over 250 major facilities in 50 countries. For more information visit www.smiths.com
About Smiths Aerospace
Smiths Aerospace is a leading transatlantic aerospace systems and equipment business, with more than 11,000 employees and $2 billion revenues globally. The business holds key positions in the supply chains of all major military and civil aircraft and engine manufacturers and is a world-leader in digital, electrical power, mechanical systems, engine components and customer services. For further information visit www.smiths-aerospace.com
About Smiths Detection
Smiths Detection is part of the global technology business Smiths Group. It offers advanced integrated security solutions for customers in civil and military markets worldwide and is a leading technology developer and manufacturer of sensors that detect and identify explosives, chemical and biological agents, weapons, and contraband. Its advanced technology security solutions also include Smiths Heimann x-ray imaging systems, millimeter-wave technology and a specialist software supply business for the management of large sensor and video surveillance networks. Separate business units focus on related products for the life sciences, and food manufacturing industries. For more information visit www.smithsdetection.com
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