General Electric Co. is in talks to acquire Italian defense company Avio SpA from buyout firm Cinven Ltd., which rejected a previous offer from two private-equity funds, according to people with direct knowledge of the talks.
CVC Capital Partners Ltd. and Clessidra SGR SpA don’t plan to revise their offer of about 3 billion euros ($3.9 billion) for Avio, said the people, who declined to be identified because the discussions are private, leaving GE to pursue the acquisition. Cinven is also considering holding an initial public offering of Avio next year, the people said.
London-based Cinven, which is seeking 5 billion euros for a new fund, began preparing Avio for a sale last year when it hired banks to manage an IPO of the company. The stock sale was postponed amid stock-market swings, after Cinven received approaches for the asset from suitors including France’s Safran SA, which makes jet engines and aerospace components, and GE.
Officials for Cinven, Avio, CVC, Clessidra and GE declined to comment.
Avio makes components for GE’s newest engine, the GEnx, which powers Boeing 787 Dreamliner and 747-8 wide-body airliners, according to the company’s website. It’s also a supplier to CFM International SA, a joint venture between GE and Safran SA that’s the exclusive maker of engines for the Boeing 737, the world’s most widely flown passenger jet.
Cinven bought Avio, based in Turin, Italy, in 2006 from Carlyle Group and Finmeccanica SpA in a deal that valued the company at about 2.6 billion euros.
Finmeccanica SpA, Italy’s biggest defense company, in May agreed to sell its 15 percent stake in Avio to Fondo Strategico Italiano SpA, the country’s 4 billion-euro investment fund. As part of the joint offer with CVC and Clessidra, the fund was set to own about 20 percent of Avio, and Cinven would keep about 10 percent of Avio under that plan, a person said.
An official for FSI in Rome declined to comment on the fund’s involvement in either bid.
--With assistance from Tim Catts in New York. Editors: Chris V. Nicholson, Jon Menon
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