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.

FMI: www.geae.com, www.smiths-aerospace.com/