Smiths To Acquire Engine Components Maker DGT

Defense Daily, March 16, 2004 by Calvin Biesecker

By Calvin Biesecker

Britain's Smiths Group yesterday said it has agreed to acquire a small U.S. company that makes turbine engine components, primarily for U.S. military aircraft, in a $102 million cash deal that would allow it to provide its customers with complete modules.

Dynamic Gunver Technologies (DGT), based in Manchester, Conn., had $110 million in sales last year, with about 60 percent of its business related to defense.

"They have very, very strong positions on military products," Alan Fenwick, vice president of business development for aerospace components at Smiths Aerospace, told Defense Daily in a telephone interview. "This will fit well with our overall customer strategy." Smiths Aerospace, headquartered in Grand Rapids, Mich., has $1.6 billion in revenues and is the North American arm of Smiths Group.

Smiths' customer strategy includes moving up the food chain in terms of being able to offer a higher level of packaged product to the prime engine manufacturers, which continue to consolidate their supply chains, Fenwick said.

With DGT, Smiths will be able to supply a major section of the aft part of an engine, including the fan duct, augmenter duct, synch ring, static structure, flaps and seals, Fenwick said.

Unlike Smiths, which does a lot of work for aircraft engine maker General Electric [GE], DGT is a preferred supplier to the other major U.S. aircraft engine maker, United Technologies Corp.'s [UTX] Pratt & Whitney division.

Through the combination, Smiths hopes to be able to provide GE with DGT's capabilities, Fenwick said.

"DGT provides a strong complement to our existing engine components business," John Ferrie, group managing director of Smiths Aerospace, said in a statement. "This acquisition enables us to realize customer and product synergies across the businesses. Offering completed engine sub-assembly modules will substantially increase the size of our addressable markets."

DGT also supplies directly to the U.S. military, to a lesser extent Britain's Rolls-Royce and has some aftermarket business, Fenwick said.

Smiths Aerospace also supplies to Rolls-Royce but doesn't have an aftermarket business for its engine components, Fenwick said.

Fenwick said that Smiths would link DGT with its engine components fabrication business, Tri-Industries, which is located in Terre Haute, Ind. The combination will "make us extremely strong in the fabrications business," he said.

Smiths said that flap and seal assemblies made by DGT would complement its components for engines powering the Boeing [BA] F-15 and Lockheed Martin [LMT] F-16 fighters and for engines used on most commercial and regional jet aircraft.

DGT specializes in laser cutting, hydroforming, titanium hot sizing, electron beam welding and complex multi-axis machining. The company also specializes in thin wall hot section components, such as combustors, flaps, seals and augmentor assemblies, made from high temperature alloys and titanium.

The pending deal still requires regulatory approval. DGT, which has about 500 employees, also has a majority stake in a manufacturing business in Poland that could offer Smiths opportunities for lower cost production and entries into other European programs, Smiths said.

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