GE, Honeywell terminate merger agreement
Associated Press
Published Oct 3 2001
FAIRFIELD, CONN. -- General Electric Co. and Honeywell
International announced Tuesday they have terminated their
merger agreement, three months after European regulators
rejected the $41 billion deal.
Fairfield-based GE agreed to reimburse Honeywell for
merger-related expenses and to extend two financing
arrangements.
GE also agreed to buy two businesses from Honeywell with
estimated sales of $35 million for undisclosed terms. The
businesses are Tensor, an oil and gas sensor business based in
Round Rock, Texas, and Honeywell Advanced Composites,
based in Newark, Del. The deal also includes certain technology
related to microturbines and fuel cells.
GE and Honeywell also released each other from all
merger-related claims.
"This is about moving on -- both parties were ready to do
that," said Gary Sheffer, a GE spokesman.
Termination of the merger allows other companies to bid for
Honeywell. But Honeywell CEO Lawrence Bossidy, who took
over after the merger was rejected, has said he has no intention
of selling the company.
The decision is not surprising because GE was not expected to
make another attempt to acquire Honeywell, said John Inch, an
industrial analyst with Bear Stearns in New York City.
The merger was by far the largest GE had ever attempted.
Jack Welch, who retired as GE's CEO last month, put a bid in
for Honeywell a year ago, snatching the deal from competitor
United Technologies Corp., based in Hartford, Conn.
Inch said GE probably would not attempt such a large merger
again in the near future, but not because the conglomerate is
afraid to take on big deals. He said GE is well positioned for
strong growth without undertaking such a large deal and more
typically buys companies for between $200 million and $1
billion.
Both GE and Honeywell are continuing to appeal the decision
by the European Commission blocking the deal. The appeals,
filed last month, are aimed at challenging some of the findings
by European regulators rather than at reversing the decision.
GE wants to refute the European Commission's finding that the
company has a dominant position in the jet engine market.
That ruling, if allowed to stand, could make it difficult for GE
to make future acquisitions.
European officials contended that GE might have been able to
drive competitors out of the aerospace market by offering
customers a complete package of GE engines, Honeywell
avionics and financing from GE Capital Aviation Services.
Honeywell would not comment on details of its appeal.
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