BAE Systems Plc
The British defense contractor, which hired JPMorgan Chase & Co
Bankers and analysts said the unit, which makes aerospace parts including aircraft engine controls, could fetch $1.5 billion to $2 billion for BAE.
Shares of BAE fell 2 percent immediately after BAE confirmed the sale was off. The stock recovered some ground and was down 0.3 percent at 339.4 pence on the London Stock Exchange, valuing the company at around 11.6 billion pounds.
BAE Systems received three final bids, including one from General Electric Co
People familiar with the matter told Reuters previously that GE, industrial company Eaton Corp
We've always said it was a strong business and we did say there was no guarantee we'd sell it, a BAE spokeswoman in London told Reuters. We have done a strategic review of the business and decided it will be in our best interests to hold on to it.
Representatives for GE, Eaton and Warburg were not immediately available for comment.
BAE sought at least 9 to 9.5 times the unit's earnings before interest, tax, depreciation and amortization (EBITDA) of slightly less than $190 million -- or $1.7 billion to $1.8 billion -- but bidders wanted to pay below the range, the people said previously.
The BAE unit is among several aerospace assets that have been pulled from auction processes over the past year partly because buyers and sellers failed to narrow differences over the prices.
Private equity firm the Carlyle Group
BAE's Platform Solutions unit makes digital engine controls, which govern fuel flow and control variable engine geometries and are used in a wide range of aircraft, including the Airbus A320 and the Boeing 737 -- the two hottest-selling passenger planes in history.
GE is a major customer of BAE's aircraft engine controls and the involvement of GE in the auction process made it difficult for its key competitors in the aircraft engine market to pursue the BAE assets, people familiar with the matter told Reuters previously.
The BAE unit also includes a commercial avionics business, which it bought from Boeing Co
(Reporting by Soyoung Kim and Rhys Jones in London. Editing by Maureen Bavdek, Robert MacMillan, Dave Zimmerman)