PARIS French aerospace firm Safran (SAF.PA) said it had agreed to buy the electrical power systems activities of Goodrich, owned by United Technologies (UTX.N), for around 310 million euros ($401 million) in cash.
Deals in European aerospace and defense are in focus after a proposed $45 billion merger between Airbus parent firm EADS EAD.PA and British defense firm BAE Systems (BAES.L) collapsed last week.
The Safran transaction is expected to close late in 2012 or early in 2013. It includes the Goodrich division's 60 percent stake in Aerolec, a joint venture with Thales (TCFP.PA).
Aerolec supplies Airbus with the main electrical power generation equipment used aboard the A380 superjumbo airliner and A400M military transport plane.
Safran shares were up 1.9 percent to 30.26 euros, making them the third-highest gainer on the Paris CAC 40 index .FCHI which was up 0.8 percent.
"This acquisition marks a leap forward for Safran in electric power systems, particularly in electric power generation and primary and secondary distribution where it is taking the global no. 2 spot," a Paris-based trader said.
Safran said the Goodrich operations were expected to generate revenues of over $200 million in 2012, of which the aftermarket business should contribute half.
Safran was warned by activist investor The Children's Investment Fund Management(TCI) last week to avoid making "value destructive" acquisitions outside the civil aerospace sector.
($1 = 0.7730 euros)
(Reporting by Lionel Laurent and Blaise Robinson; editing by Jason Neely)