GE to buy Italian Avio unit for $4.3bn
Milan, December 22, 2012
US conglomerate General Electric has agreed to buy the aviation business of Italy's Avio for $4.3 billion, in a sign of confidence about the country's underlying strength despite its deep recession.
The deal comes as Europe's fourth-biggest economy labours to become more competitive under a reform agenda set by technocrat Prime Minister Mario Monti, who stepped down yesterday before general elections seen in February.
"We are convinced that Italy will exit the crisis," Nani Beccalli, president and chief executive of GE Europe, said yesterday.
"There are undoubtedly hurdles linked to red tape. But the strategic value of the deal is so big (it would offset other issues)," Beccalli said.
GE agreed to buy Avio from private equity fund Cinven and Italian state-controlled defence group Finmeccanica.
The move frustrated the aspirations of France's Safran and Italy's state-backed Strategic Fund, which had been trying over the last few months to take over Avio.
GE, whose businesses range from infrastructure technology to financial services, said Avio would boost its global supply chain capabilities as its engine production rates rise to meet growing customer demand.
Avio, which makes components for the GE Dreamliner engine used by Boeing, ranks among Italy's industrial jewels and is one of the most technologically advanced companies in its field.
The move could be a sign that GE in coming years might be ready to consider larger acquisitions.-Reuters