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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: Jim Spitz who wrote (28523)	6/19/2001 7:47:51 AM
From: Jim Spitz	Read Replies (1) \| Respond to of 37746

EU modifies position on GE's merger with Honeywell Paul Meller New York Times Tuesday, June 19, 2001 BRUSSELS, BELGIUM -- The European Commission appeared on Monday to narrow the distance between what General Electric has offered and what the commission has demanded for approval of GE's $45 billion aerospace merger with Honeywell International. In a prepared statement, the commission said it would accept an offer short of a sale of GE's aircraft leasing unit, GE Capital Aviation Services. Some people close to the commission have said the European regulators wanted GE to sell or spin off the unit. Monday's statement repeated the commission's demand for a structural commitment to change the way the unit operates, but added "without putting in question the control by GE." Some people close to the commission interpreted the statement as a conciliatory move. "It is a fig leaf, Mr. Monti is backing down," said one lawyer who has acted on behalf of the commission's competition authority in the past. Mario Monti is the European competition commissioner. Far from shrugging off the political noise of recent days, Monti "has woken up to the unavoidable political fallout that his tough stance is provoking," he said. Monti, meanwhile, responded sharply to recent comments on the deal by President Bush and others. "I deplore attempts to misinform the public and to trigger political intervention," Monti said Monday. Monti said criticism of the commission was "not only unjustified but hard to understand, since the case has not been decided yet." Monti also accused GE of "misinforming the public" after Harry C. Stonecipher, the vice chairman of Boeing, told the French newspaper Le Monde that opposition from Airbus Industrie was the reason that regulators at the European Commission are opposing the Honeywell deal. At the Paris air show on Monday, Stonecipher led off the company's official news conference by apologizing to Airbus, which is Boeing's archrival. On Sunday, Airbus CEO Noel Forgeard strongly denounced Stonecipher and said the airplane maker was in favor of the GE-Honeywell deal. "Mr. Forgeard is offended by my statements and I apologize to him because he is a great friend," Stonecipher said. Stonecipher spent 27 years at GE rising to become the head of its jet engine division. He said it was good news that Airbus supported the deal. "People say, 'Do you stand by your statement?'" he added. "Well, it would be kind of ridiculous for me to stand by the statement when the CEO of Airbus says they are in favor of it. I have to accept that at face value and say, 'Wonderful -- we are on the same side of this issue,' and go forward from there." Honeywell said Monday that its board had met and that its directors remained committed to the GE acquisition. "The Honeywell board said it expects that GE will do everything possible to secure regulatory approval for the transaction," the company said in a prepared statement. In his statement on Monday, Monti said that in addition to the "powerful combine" created by pooling GE and Honeywell products, "one must also add GE's leasing and financial arms" and its direct parent GE Capital, which finances airlines' own aircraft acquisitions. The European Commission shares the concerns of some rival aerospace manufacturers that, as the world's largest single buyer of aircraft, the leasing unit, known as Gecas, will fit only GE and Honeywell avionics and other aircraft equipment, just as its aircraft chiefly use GE's engines. General Electric offered to "ring-fence" Gecas as a separate operation from GE Capital and keep it at arm's length from Honeywell products in what it called its final offer of concessions submitted last Thursday. The commission said this offer did not go far enough. © Copyright 2001 Star Tribune. All rights reserved.