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GE Partially Divests Aviation Unit - Analyst Blog

Posted
12/31/2012 10:30:00 AM
By: Zacks.com
Referenced Stocks:GE;WWD

GE Aviation Systems, an operating unit of General Electric Company ( GE ), has recently announced the signing of an agreement with Woodward, Inc. ( WWD ), an independent designer and manufacturer of control solutions for the aerospace and energy markets, to divest its hydraulic thrust reverser actuation systems unit for roughly $200 million in cash.

Woodward expects to fund the transaction through available cash and committed financing options. The company presently has full availability under its $400 million worth revolving credit facility.

In concurrence with the deal, both the participating companies also signed a preferred supplier agreement for thrust reverser actuation systems, which are primarily deployed in commercial planes. The acquisition is expected to augment the aerospace segment of Woodward with superior motion control technologies and operating platforms of General Electric. Moving forward, Woodward expects to achieve significant operating synergies through mutual sharing of advanced technologies, thereby increasing its profitability.

For fiscal 2013, the to-be divested unit, which manufactures various products for commercial aircrafts such as the Boeing 737, Boeing 747, Boeing 777, and Airbus A320, anticipates to rake in sales of $150 million. Post-acquisition, the Duarte California-based business would be integrated into the aerospace business segment of Woodward.

General Electric is one of the largest and the most diversified technology and financial services corporations in the world. With products and services ranging from aircraft engines, power generation, water processing, and security technology to medical imaging, business and consumer financing, media content and industrial products, it serves customers in more than 100 countries and employs more than 287,000 people worldwide.

Its segments include Energy Infrastructure, Aviation, Healthcare, Transportation, Home & Business Solutions and GE Capital. Evendale-based GE Aviation Systems is a premier supplier of commercial and military jet engines and components. It also provides avionics, electric power, and mechanical systems for aircraft along with an extensive global service network to support these products.

General Electric currently has a Zacks #3 Rank, which translates into a short-term Hold rating. We have a long-term Neutral recommendation on the stock.



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