GE Aviation, an operating unit of
General Electric Company
), recently announced the acquisition of the aviation business of
Avio S.P.A for $4.3 billion. The aviation business will be
acquired from Cinven - a European private equity firm and
Finmeccanica - an Italian aerospace group.
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Headquartered in Turin, Italy, Avio primarily manufactures
aviation propulsion components and systems for civil and military
aircrafts and employs roughly 5,300 people, including
approximately 800 in the space unit. However, the acquisition
excludes the space unit. General Electric enjoys a long-standing
relationship with Avio. Avio has been supplying components to the
American Conglomerate since 1984 with more than half of the
revenue derived from components for General Electric and General
Electric joint venture engines. Avio generated $2.4 billion in
revenues in fiscal 2011.
Through this acquisition, GE aviation will have a greater
participation in the jet propulsion business, the most attractive
sector of the aviation industry. The acquisition is a strategic
move by GE aviation to capitalize on Avio's capabilities to
expand beyond aviation and strengthen its customer relationships.
Apart from strengthening its position in the aviation industry,
GE also intends to pursue new opportunities in power generation,
oil and marine products. In addition, this transaction is
expected to further bolster GE's global supply chain capabilities
as its engine production rates continue to rise in order to meet
growing customer demand.
General Electric operates as a technology and financial services
company. Its segments include Energy Infrastructure, Aviation,
Healthcare, Transportation, Home & Business Solutions and GE
Capital. Evendale-based GE Aviation is a leading provider of jet,
turboshaft and turboprop engines and components and integrated
systems for commercial, military, business and general aviation
General Electric currently has a Zacks #4 Rank, which translates
into a short-term Sell rating. We also have a long-term Neutral
recommendation on the stock. One of its competitors,
) also holds a Zacks #4 Rank.