GE offers to sell 19.9 percent of lease company in final effort to win over EU officials, source says
Associated Press
Thursday, June 28, 2001
BRUSSELS, Belgium -- General Electric Co. has offered to sell a stake in one of its most prized units to win European Union antitrust clearance for its $41 billion
purchase of Honeywell International Inc., a source close to the deal said today.
The last-ditch offer would have GE sell a 19.9 percent stake in its aircraft-financing unit, GE Capital Aviation Services, to large financial institutions, but not to the
public, the source said on condition of anonymity.
The minority shareholders would appoint one independent director to the GECAS board, the source said.
GE's remaining 80.1 percent would ensure that GE would continue to benefit from the tax grouping of GE and GECAS, the source said.
EU Commission spokeswoman Amelia Torres confirmed that discussions were being held but refused to elaborate.
EU antitrust officials had expressed concern that GECAS, one of the world's top purchasers of aircraft, would promote GE-Honeywell equipment to the detriment of
competitors. They had pushed GE to sell shares in GECAS to independent investors to ensure greater discipline without threatening GE's control of the unit.
In its June 14 ``final offer,'' GE proposed introducing separate management for GECAS, but had refused to consider selling a minority share.
GE spokesman Gary Sheffer said Wednesday the company's outside advisers have had informal discussions with European Commission staff. He would not comment on
details of the talks.
GE had offered to divest Honeywell assets with a combined annual revenue of $2.2 billion, but Competition Commissioner Mario Monti said GE could lower that figure
if it agreed to a ``structural commitment'' with regard to GECAS.
Monti was to meet with GE representatives today to evaluate the new offer, the source said.
The Commission was expected to make its final decision on the deal at its meeting next Tuesday, but the new offer could result in a postponement. The legal deadline
for a decision is July 12.
The deal won conditional clearance in the United States in May, and U.S. politicians up to President Bush have expressed concern about the prospect of it being blocked
in Brussels.
Torres brushed of criticism that the deal could harm U.S.-EU relations, which she described as solid.
``This is about competition law and enforcing competition law in Europe and has nothing to do with politics or trade relations,'' she said.
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