BAE seeing high interest in sale of unit

By Andrea Shalal-Esa and Soyoung Kim

NEW YORK (BestGrowthStock) – BAE Systems Plc (BAES.L: ) said on Thursday it is seeing high interest in the sale of its aerospace platforms solution unit, but gave no details on when a deal could be announced or its possible value.

Andy Wrathall, director of investor relations for BAE, cited “quite a high level of interest” in the unit, but said the process has not yet reached a point that would allow him to forecast how soon a deal might be announced.

Depending on the bids, he said, BAE would move to sell the unit or keep it.

“This is not a fire sale or an emergency exit. It’s a very good, strong business,” Wrathall said.

The unit has attracted bids from heavyweights, including General Electric Co (GE.N: ), Eaton Corp (ETN.N: ) and Honeywell International Inc (HON.N: ), people familiar with the matter told Reuters last month.

With final bids expected this month, GE and Eaton remain interested in the business that is expected to fetch up to $2 billion, several sources told Reuters this week.

Private equity firm Warburg Pincus (WP.UL: ) and French aerospace and defense group Safran SA (SAF.PA: ) have also examined potential bids for the unit, the people said.

Buyout firms the Carlyle Group (CYL.UL: ) and Vestar Capital Partners also looked at the business earlier, but their interest had since cooled, the sources said.

GE is a major customer of BAE’s aircraft engine controls and is mainly attracted by the division of BAE’s platform solutions group that makes aircraft-engine electronic controls for GE and for CFM International, sources have said. CFM is a joint venture between GE and Safran.

BAE’s platform solutions group also includes a commercial avionics business, which it bought from Boeing Co (BA.N: ) in 2004, that makes aircraft components that help with navigation and surveillance, as well as a division that makes hybrid propulsion systems for buses and trucks.

That hybrid division has emerged as a potential drag in the auction process as its performance was not as robust as bidders initially hoped, one of the sources said.

JPMorgan Chase & Co (JPM.N: ) and Wells Fargo & Co (WFC.N: ) are advising BAE on the sale.

(Reporting by Andrea Shalal-Esa and Soyoung Kim; editing by Andre Grenon)

BAE seeing high interest in sale of unit