GE to Buy Smiths Group Aerospace Unit

General Electric recently agreed to buy aerospace business Smiths Group PLC, Britain's third-largest aerospace company, for $4.8 billion.

Smiths shareholders will receive $2.1 billion, the London firm said in a statement. GE and Smiths also will form Smiths GE Detection. An enthusiastic market saw Smiths shares rise in excess of 15%, reaching the equivalent of $22.24 on the London Stock Exchange.

The deal would expand GE's aerospace division by adding Smiths' flight management systems, electrical power management, mechanical actuation systems and airborne platform computing systems, according to GE.

"GE Aviation is growing about 10% per year, and this acquisition gives us a technology growth platform that will be accretive to our net income and will deliver immediate and future value for our investors," GE CEO Jeff Immelt said in a statement.

GE Aviation produces 37 engine types and is headquartered in the Cincinnati, OH, suburb of Evendale. Smiths Aerospace has more than 11,000 employees and posted 2006 revenue of $2.4 billion. It has been working on projects such as Boeing's 787 aircraft, the Airbus A380 and the Joint Strike Fighter military project.

After selling its aerospace division, Smiths will be left with detection, medical and specialty engineering operations. A shareholders meeting will be called during the second quarter to approve the sale, which is also subject to regulatory approval.