General Electric (NYSE:GE) will soon expand its aircraft engine business with a strategic European acquisition.
Unnamed sources tell the Wall Street Journal that GE is close to completing an agreement to purchase Italy’s Avio SpA for $4 billion, with official announcement of the deal coming as early as Thursday.
Cinven, a European private equity group, acquired 81% of Avio in 2006. It had been preparing to take the aerospace group public, but faced uncertain results given the state of European financial markets.
According to the sources, GE will acquire Avio’s jet engine business, which serves both defense and commercial markets, but is not interested in the company’s satellite launch propulsion business.
GE is already Avio’s largest aviation customer and the acquisition would consolidate its supply chain.
In October, GE announced third-quarter earnings that met Wall Street’s forecasts, but fell short on quarterly revenues.
Shares of General Electric rose more than 1% in late Monday trading.