Companies Say Things Should Be 'Business As Usual'
Smiths Aerospace, the
aerospace division of British consortium Smiths Group, has seen its
business surge in recent years on orders from Boeing, Airbus, and
Lockheed Martin. That has not gone unnoticed by American
conglomerate General Electric -- which announced Monday it has
reached an agreement to buy the aircraft components supplier for
$4.8 billion.
"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 Chief
Executive Officer Jeff Immelt. "This acquisition is consistent with
our strategy to invest in high-technology infrastructure businesses
that deliver strong growth, earnings expansion and higher
margins."
"GE Aviation is growing about 10 percent 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," Immelt added.
What the management-speak translates to is increased revenue for
GE, on the strength of Smiths' many military and commercial
projects -- including numerous components onboard the Boeing 737
and Airbus A320 airliners, as well as the upcoming Boeing 787
passenger jet, and the Lockheed Martin F-35 Lightning II.
GE spokeswoman Jennifer Villareal said GE and Smiths workers
shouldn't feel much of an impact from the deal, as each company
caters to different segments of the aerospace market. GE makes
aircraft powerplants, while avionics and flight management systems
are Smiths' forte, although the company also makes such components
as engine parts and landing gear systems.
"It's going to be business as usual. It's a growth position,
with complementary businesses," she said.
In a statement on the company website, Smiths CEO Keith
Butler-Wheelhouse said, "The structure of the aerospace industry is
changing -- in particular its increased capital requirements and
the growing importance of supplier scale, especially as the next
generation of large programs kicks in. By selling Aerospace, we
crystallize the value for our shareholders. At the same time,
we know that this business is going to a great owner."
The deal will have to pass regulatory muster on both sides of
the pond. If the deal gets ok'd, Smiths' shareholders should get a
nice fat paycheck in the form of B shares in June.
Smiths Aerospace has more than 11,000 employees in the US and
Great Britain, and reported sales of $2.4 billion dollars in
2006.