MILAN Nov 15 General Electric has
emerged as the front runner to acquire Avio, a privately held
airplane parts supplier, and will present its plans to Italian
government officials on Friday, people familiar with the
situation on Thursday.
"GE is in the lead at the moment," said one of the people
familiar with the situation, adding that the sale is being
managed by Cinven, a private equity fund that controls Avio.
The Italian government has special powers to safeguard the
country's strategic defence industry assets after the cabinet
passed new "golden share" rules in August. Therefore the meeting
indicates that GE is being seriously vetted as a potential
The private equity owners of Avio are pressing ahead with
talks to sell the company, as a planned listing looks less
likely, sources close to the deal said earlier this month. Press
reports have valued the company at more than 3 billion
Avio, based in Turin Italy, supplies engine parts for the
Eurofighter Typhoon and for General Electric and Rolls Royce
. It had 2011 revenue of more than 2 billion euros and
adjusted earnings before interest, depreciation and taxes of
In May Avio revived plans to go public, filing to list on the
Milan bourse, but the following month sources told Reuters the
company had postponed the offering for the second time in a year
due to market conditions.
A consortium of buyers made up of private equity funds CVC
Capital Partners and Clessidra, and state-backed Fondo
Strategico Italiano (FSI) are also in talks to buy Avio, Reuters
reported on Nov. 2.
"Talks between Cinven with Clessidra, CVC Partners and FSI
have stalled," said a second person familiar with the situation.
"Meanwhile Cinven has been continuing talks with General
Electric and, after a pause, with Safran." France's
Safran has interests in airplanes, aerospace and defence.
"GE is very interested, but I don't know how far along the
talks are," said the second person.
General Electric had no comment.
FSI is close to reaching an agreement with state-controlled
defence company Finmeccanica to acquire Finemccanica's
14 percent stake in Avio.
"Talks between FSI and Finmeccanica are at a very advanced
stage," said a third person familiar with the situation. "FSI
wants to start with a 14 percent stake in Avio and then build it
up to 40 percent, possibly in conjunction with other investors."
General Electric could be such an investor.