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.
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 London-based 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.
GE rose 1.7 percent to $21.04 at the close in New York, extending the shares’ year-to-date gain to 17 percent. That outpaced the 11 percent advance for the Standard & Poor’s 500 Index.
Avio makes components for GE’s newest engine, the GEnx, which powers Boeing Co.’s 787 Dreamliner and 747-8 jumbo jet, according to the company’s website. It’s also a supplier to CFM International SA, a GE-Safran joint venture that is the exclusive engine supplier 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.