General Electric has reached an agreement to buy Smiths Aerospace, a British supplier to aircraft manufacturers, for 4.8 billion dollars (3.7 billion euros) in cash, the two companies have said.

Smiths Aerospace said it would return 2.1 billion pounds (3.2 billion euros, 4.1 billion dollars) to shareholders as a result of the sale, which employs 11,000 people in six countries.

Smiths Aerospace, a unit of Smiths Group, produces integrated systems for flight management, electrical power management and control of mechanical functions.

The price of shares in Smiths Group soared by up to 17 percent to 1,155 pence in London trade.

"GE and Smiths fit together well because our product offerings are complementary, and because we have similar customers and deep domain expertise in this industry," GE chairman and chief executive Jeff Immelt said in a statement.

"This acquisition is consistent with our strategy to invest in high-technology infrastructure businesses that deliver strong growth, earnings expansion and higher margins," he added.

The deal is subject to approval by Smiths Group shareholders as well as customary regulatory reviews.

Smiths Group chief executive Keith Butler-Wheelhouse said his company was delighted to have reached an agreement.

"The consideration reflects the future potential of Smiths Aerospace, which has been created by intense investment in technology over the past five years and by the successful efforts of the dedicated Smiths Aerospace employees," Butler-Wheelhouse pointed out.

Looking ahead, analysts said the takeover could lead to further break-up of Smiths Group, with the group possibly facing pressure from investors or industry rivals to offload also its medical, detection and speciality engineering operations.

The aerospace operation could even attract rival predators, with Smiths' rivals concerned about GE's expansion in Europe.

Nick Cunningham of broker Panmure Gordon and Co said that there "is clearly scope for others to step in".

He said in a research note: "Smiths is a potential candidate as a target for US defence contractors wanting a UK presence to satisfy UK Ministry of Defence national content requirements.

"More to the point, the sight of GE moving into their space must be deeply worrying for the three main avionics players, Honeywell, Collins and Thales."

Smiths Aerospace reported sales of 2.4 billion dollars in 2006.

Shares in Smiths Group topped the risers on the British capital's FTSE 100 index at the half-way stage on Monday, leaping 13.98 percent to 1,122.73 pence.