SINGAPORE -- Defense group Singapore Technologies Engineering, one of the world's leading aircraft maintenance providers, said on Sept. 13 that it will buy an aircraft component unit from General Electric in a bid to expand its aviation manufacturing business.
ST Engineering said it will buy all of Baltimore-based Middle River Aircraft Systems from the U.S. conglomerate in a deal valued at $630 million. MRAS produces nacelles -- casings that house engines -- for aircraft makers including Airbus and Bombardier. The acquisition is expected to be completed by the end of the 2019 first quarter.
ST Engineering CEO Vincent Chong, in a webcast briefing, described the deal as an "enabler" that will allow the company to produce more varied aircraft components, such as doors.
The Singaporean state-owned group makes defense equipment for the city state, but it also has commercial businesses including aircraft maintenance and electronics production. In aircraft components, ST Engineering supplies flat panels for Airbus.
The purchase comes as the outlook for the company's aircraft maintenance business is unclear, with newer planes requiring less upkeep.
Competition is also intensifying because maintenance providers are growing in neighboring countries with lower labor costs. Regional rivals include Garuda Maintenance Facility AeroAsia, a unit of flag carrier Garuda Indonesia.
Nacelle manufacturing, on the other hand, is expected to see steady growth over the coming decades. According to ST Engineering, 37,390 aircraft will be added in the global market over the next 20 years as air traffic demand rises.
MRAS has been in the aviation business for about 90 years, ST Engineering said. It has around 800 employees, making engine nacelles as an original equipment manufacturer for global aircraft makers.
ST Engineering, which has partnered with GE in the engine repair business, said it will obtain patents and other intellectual property owned by MRAS.
Thursday's announcement came after Singapore markets closed. ST Engineering's share price rose 0.3% on the day to 3.29 Singapore dollars, which translates to a market value of SG$10.27 billion ($7.5 billion).