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EU Spurns GE's Plan to Save Honeywell Bid

June 29, 2001|From Bloomberg News

BRUSSELS — General Electric Co.'s last-minute proposal to European regulators to win approval of the company's $46-billion purchase of Honeywell International Inc. was rejected, sources familiar with the situation said Thursday.

European Competition Commissioner Mario Monti is poised to scuttle the transaction when the commission meets next week, a move that would mark the first time the European Union has acted alone to kill a merger. A rejection would be a blow to General Electric Chairman and Chief Executive Jack Welch, who delayed retirement to oversee the company's largest-ever acquisition.

Welch, who balked two weeks ago at making more concessions, had proposed selling a stake of about 20% in GE's plane-leasing unit to a financial services firm, sources familiar with the offer had said. An earlier offer to divest aerospace businesses with $2.2 billion in sales was scaled back as part of the latest proposal, the sources had said.

"Sounds like it's over," said Tim Ghriskey, a money manager at Dreyfus Corp., which holds shares in both companies.

The EU has said it plans to block the purchase because of concern General Electric would dominate the market for jet engines and airplane electronics. Although the modified offer addressed some of the EU's concerns, including how plane-leasing unit GE Capital Aviation Services is managed, antitrust experts and analysts said the offer by the largest company by market value didn't go far enough.

The purchase has received tentative approval from U.S. and Canadian regulators.

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