* GE could finalise deal for Italian company this week
* France's Safran still not out of race -sources
* GE not that interested in the space assets -source
* Italy government regards asset as strategic
MILAN, Dec 17 General Electric Co is
close to finalising an agreement to buy Italian aerospace
supplier Avio as early as this week for more than 3 billion
euros ($3.95 billion), sources close to the deal said on Monday.
"Barring last-minute surprises, the deal could be closed
between Tuesday and Wednesday, with an announcement on
Thursday," said one of the sources.
A second source said the price is "more than 3 billion
euros" and GE is the preferred bidder.
"Nothing is closed, but there is a desire to get it done
before the (Christmas and New Year) holidays," a third source
close to the matter said.
Avio, based in Turin in northern Italy, is owned by BCV
Investments, in which Cinven private equity has a majority.
Cinven bought the company in 2006 in a deal that valued the
company at about 2.6 billion euros.
Avio was not immediately available for comment, while Cinven
and General Electric declined to comment.
Another source with knowledge of the situation said a
Thursday deadline sounded realistic since GE had been conducting
due diligence for some time.
DOWN BUT NOT OUT
But the source added that France's Safran SA had
not given up on the deal and was trying to get back in the race.
"I am not aware Safran is out of the race," a fifth source
Avio, which supplies engine parts for the Eurofighter
Typhoon and engine makers GE and Rolls Royce Holdings Plc
, has previously been in talks with other potential
bidders, including Safran.
One of the sources noted GE was not particularly interested
in the space assets and could try to sell them at a later stage.
In this case, Safran would be an obvious buyer but,
according to Italian bankers involved such a move, would face
The government would likely keep a veto right on the space
business, the source said.
The Italian government regards Avio as a strategic asset and
is thought to be reluctant to let it fall into foreign hands.
Italian defense group Finmeccanica, which owns
around 14 percent of Avio, reached an agreement last May to sell
its stake to state-controlled investment fund Fondo Strategico
But that deal was subject to Avio being listed, and earlier
this year sources said the plans to go public had been postponed
due to adverse market conditions.
State-controlled Finmeccanica has previously said it was
looking to sell 1 billion euros of assets as it moves to cut
debt and avoid a credit rating downgrade.
Avio is a major supplier of parts for GE aircraft and
helicopter engines, demand for which is expected to grow as
Airbus, Boeing Co and other manufacturers
whittle down record order backlogs.
In 2011 it had revenues of more than 2 billion euros and
adjusted earnings before interest, taxes, depreciation and
amortization (EBITDA) of 384.2 million euros.