Smiths in £2.5bn aerospace sale

Smiths makes a wide range of aerospace products

Smiths Group has agreed to sell its aerospace division to US giant General Electric (GE) for £2.5bn ($4.8bn).

The UK aerospace-to-medical equipment maker said it was a cash deal, and that it would return £2.1bn to shareholders.

Smiths said it had decided to sell the aerospace unit to General Electric because of the increased investment requirements of the industry.

Smiths' shares closed up 11% at 1094.5 pence on the news. The firm's aerospace unit employs 11,000 staff in the UK.

'Great owner'

Smiths and GE also announced a new joint venture to manage their detection and security businesses.

By selling aerospace, we crystallise the value for our shareholders Keith Butler-Wheelhouse, Smiths Group chief executive See Smiths Group shares

Smiths will own 64% of the new operation with GE controlling the remainder.

"By selling aerospace, we crystallise the value for our shareholders," said Smiths chief executive Keith Butler-Wheelhouse.

"At the same time, we know that this business is going to a great owner."

Smiths added that it intended to complete the deal in the second quarter of this year.

General Electric is the world's second biggest company by market value.