General Electric Co
GE, which has control over the sale process as a major customer of BAE Systems' aircraft engine controls, remains very interested in the unit with final bids expected in the next few weeks, the sources said.
French aerospace and defense group Safran
They asked not to be identified because details of the auction are not public.
Bankers and analysts have expected the unit to fetch between $1.6 billion to $2 billion, or roughly 8 to 10 times its earnings before interest, taxes, depreciation and amortization (EBITDA) of about $190 million.
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.
The big question in the BAE unit auction is whether GE will ultimately decide to do vertical integration by adding the maker of aircraft engine controls to its existing engine-making operations, sources told Reuters previously.
BAE's Platform Solutions group also includes a commercial avionics business, which it bought from Boeing Co
That hybrid division has emerged as a potential drag in the auction process as its performance was not as robust as bidders initially expected, sources told Reuters previously.
That has also created a price gap between the bidders and BAE Systems, which wants to sell the business at around 10 times its EBITDA, the two sources said on Friday.
Most bidders also did not want the entire Platform Solutions business but BAE Systems has no interest in selling the unit in pieces, one of the sources said.
JPMorgan Chase & Co
(Reporting by Soyoung Kim; Editing by Tim Dobbyn)