GE announced Friday the agreement to purchase the aerospace-parts division of the company Avio SpA, a manufacturer of parts and aviation propulsion systems for civil and military aircraft based in Italy, in exchange for $4.3 billion (€3.3 billion).
The announcement was made in Milan (Italy) by David Joyce, president and CEO of GE Aviation and Nani Beccalli, president and CEO of GE Europe. GE buys this division from Cinven, a leading European investment fund that owes Avio since 2006 and Finmeccanica, the Italian group present in the aerospace sector. Transaction is pending regulatory and governmental approvals.
GE unit will not acquire the space division of Avio. This acquisition, which provides parts for GE Aviation and other companies producing engines, would promote participation of GE in the jet propulsion sector, one of the most attractive areas of the aviation industry.
Avio will strengthen global supply chain capabilities of GE, whose rate of production of engines continues to grow to meet increasing demand from customers.
Avio and its customers will benefit from GE’s planned investment to expand products and services of Avio. Founded in 1908 and based in Turin, Italy, Avio is present on four continents and has approximately 5,300 employees, of which 4,500 in Italy, including about 800 in the aerospace unit. In the jet propulsion industry, Avio is a provider of low-pressure turbines, auxiliary gearboxes, geared systems, combustion chambers and other parts.
In 2011, Avio had a revenue of €1.7 billion ($2.4 billion) in the aviation sector, over 50% of this revenue was generated by parts for engines manufactured by GE and GE associated companies.
The price to be paid by GE for the acquisition of aviation division of the company Avio is a multiple of approximately 8.5 times, based on estimated earnings for 2012 before interest, taxes, depreciation and amortization. GE, the parent company of GE Aviation already has a significant presence in Italy with over 7,000 employees in seven divisions in over 20 locations, including the research and development center and education center.
Twenty years ago, GE has acquired Nuovo Pignone in Florence, which became the global headquarters of GE Oil & Gas.
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