How GE Got the Thumbs Up For Avio Aviation Acquisition
The European Commission has approved General Electric Co.’s (NYSE:GE) $4.3 billion purchase of the aviation business Avio S.p.A. after assuring the acquisition would not interfere with Avio’s involvement in the European jet fighter project (Eurojet).
Avio, an Italy-based manufacturer of aviation propulsion components and systems for civil and military aircraft, is a key contributor to the consortium working on the Eurojet project. Following GE’s announcement in December last year to purchase Avio, the commission’s antitrust authority voiced concerns the purchase could be viewed as “a conflict of interest,” considering both GE and Avio manufacture engines for fighter jets. “GE has made commitments to protect consortium information and to ensure Eurojet and Eurofighter can continue to participate in future campaigns for export sales,” the European Commission said in a statement on Tuesday.
The European Commission approved the deal on the condition that GE follows through on the agreement.
GE purchased Avio from Cinven, a leading European private equity firm that has owned Avio since 2006, and Finmeccanica, an Italian aerospace group. The acquisition of Avio’s aviation business, which provides components for GE Aviation and other engine companies, will further GE’s participation in jet propulsion, one of the most attractive sectors of the aviation industry. Founded in 1908 and headquartered in Turin, Italy, Avio operates in four continents and employs about 5,300 people, 4,500 of whom are in Italy, including approximately 800 in the space unit. In the jet propulsion industry, Avio is a provider of low-pressure turbine systems, accessory gearboxes, geared systems, combustors, and other components.
Avio has supplied components to GE Aviation since 1984 and has content on engines ranging from the large GE90 and GEnx turbofan engines for the commercial aircraft sector, to the smaller CT7/T700 turboshaft engine family for civil and military helicopters. These GE engines are among the best sellers in aviation and are expected to provide a profitable, long-term revenue stream for the company. GE stated in a press release that this acquisition will create additional opportunities to offer Avio’s products and services beyond the aviation industry and that it planned to pursue new opportunities for Avio in power generation, oil, and marine products.
“We look forward to Avio joining the GE family,” said David Joyce, president and CEO of GE Aviation. “We have worked closely with Avio for decades, and we anticipate a bright future together. This acquisition is a great strategic fit with our existing portfolio. Avio has technologies, capabilities and outstanding engineers to help grow our business. GE is an excellent corporate citizen in Italy, and we are very excited to grow the relationship.”
GE, parent company to GE Aviation, already has a significant presence in Italy with more than 7,000 employees in seven GE businesses at more than 20 locations in-country, including a research and development center and learning center. Almost 20 years ago, GE acquired Nuovo Pignone in Florence, which has been transformed into the global headquarters of GE Oil and Gas.
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