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. Last Updated: 07/27/2016

GE in $4.8Bln Deal to Buy Smiths Unit

BOSTON -- General Electric, the world's biggest jet-engine maker, agreed to buy Smiths Group's aerospace unit for $4.8 billion as rising demand for travel drives record sales of commercial aircraft at Boeing and Airbus.

The purchase will broaden GE's offerings for aviation customers -- including flight management systems, power management and airborne computing systems -- Fairfield, Connecticut-based GE said Monday in a statement.

Shares of London-based Smiths rose as much as 17 percent after the company said it planned to return ?2.1 billion ($4.12 billon) to shareholders.

GE chief executive officer Jeffrey Immelt wants to tap surging orders for Boeing and Airbus aircraft parts and plans by the U.S. military to develop new planes. The purchase would give GE some of the products, including electronic controls for aircraft, it failed to get when the European Union rejected its $45 billion bid for Honeywell International in 2001.

"Smiths might make some real sense for GE,'' Teal Group analyst Phil Finnegan said before the announcement was made. The Smiths business competes in some areas with Honeywell, Goodrich, United Technologies Corp.'s Hamilton Sundstrand unit and Rockwell Collins.

GE shares fell 3 cents to $37.89 on Jan. 12 in New York Stock Exchange trading. U.S. markets are closed Monday for Martin Luther King Jr. Day.

Smiths will also form a joint venture with GE to combine the pair's detection and homeland-protection assets. The venture, Smiths GE Protection, will be 64 percent owned by Smiths and chaired by its chief executive officer, Keith Butler-Wheelhouse.

The sale of the aerospace unit leaves Smiths with a medical business that includes products for anesthesia and respiratory care, sealing systems, as well as the security joint venture. The aerospace unit has more than 11,000 employees and $2.4 billion in sales in 2006. Revenue was almost a third of Smiths' total.

Immelt said the Smiths aerospace business is "much smaller'' as measured by sales than the Honeywell acquisition blocked by the EU.

"We focus investments where we can take leading positions in growth markets,'' Immelt said by telephone. He said the Smiths acquisitions is "largely complementary technology, we view this as additive, not consolidating,'' when asked whether jobs might be cut.

GE currently employs 16,000 people in Britain.