General Electric Co. is close to finalizing an agreement to buy Italian aerospace supplier Avio SpA as early as this week for more than €3-billion ($3.95-billion U.S.), sources close to the deal said on Monday.
"Barring last-minute surprises, the deal could be closed between Tuesday and Wednesday, with an announcement on Thursday," said one of the sources.
A second source said the price is "more than €3-billion" and GE is the preferred bidder.
"Nothing is closed but there is a desire to get it done before the (Christmas and New Year) holidays," a third source close to the matter said.
Avio is owned by BCV Investments, in which Cinven private equity has a majority. Cinven bought the company in 2006 in a deal that valued the company at about €2.6-billion.
Avio was not immediately available for comment, while Cinven and General Electric declined to comment.
Another source with knowledge of the situation said a Thursday deadline sounded realistic since GE had been conducting due diligence for some time.
But the source added that France's Safran SA had still not given up on the deal.
"I am not aware Safran is out of the race," a fifth source said.
Avio, which supplies engine parts for the eurofighter Typhoon and engine makers General Electric Co. and Rolls Royce Holdings PLC, has previously been in talks with other potential bidders including Safran.
The Italian government regards Avio as a strategic asset and is thought to be reluctant to let it fall into foreign hands.
Italian Prime Minister Mario Monti has already said he will resign once Italy passes the next budget law, and new elections are expected in February.
Italian defence group Finmeccanica SpA, which owns around 14 per cent of Avio, was in talks to sell a stake to state-controlled investment fund Fondo Strategico Italiano.
Finmeccanica is in a race to dispose of €1-billion of assets to help cut debt and avoid a credit rating downgrade.
Avio is a major supplier of parts for GE aircraft and helicopter engines, demand for which is expected to grow as Airbus SAS, Boeing Co. and other manufacturers whittle down record order backlogs.