United, Honeywell Not a Perfect Match
If United Technologies Corp. renews its attempt to buy Honeywell International Inc., analysts said Friday, its bid will be complicated by the same objections from Europe that have all but ended General Electric Co.’s romance with Honeywell.
After GE, United Technologies is seen as the leading candidate to link up with Honeywell. The Hartford, Conn.-based engine maker made a $40-billion offer for Honeywell in October, before GE weighed in at $42 billion, and remains one of the few industrial giants large enough to mount a serious bid for the firm.
Other industrial electronics firms, including Siemens of Germany and Tyco International, headquartered in Bermuda, are seen as long shots.
“I think the likelihood is very high” that United Technologies will make an offer, said Matt Collins, an analyst at the Edward Jones investment banking firm in Maryland Heights, Mo.
United Technologies was among a few companies that lobbied against GE’s proposed merger with Honeywell after European antitrust officials began reviewing the deal in February.
United Technologies complained that a combination of GE and Honeywell would strengthen GE’s ability to undercut competitors by packaging sales of jet engines and electronic cockpit controls with loans to customers to finance the purchases.
European Union antitrust authorities leveled those same objections when they demanded wholesale divestitures by a merged GE and Honeywell--divestitures the two companies have refused to make.
Unless an agreement can be reached by July 12, the merger will be the first ever to win favor with U.S. antitrust agencies only to be shot down by the EU, which reserves the right to review mergers of foreign companies doing substantial business in Europe.
Some analysts say United Technologies, which, like GE, runs an aircraft engine business in addition to a division that builds helicopters, is vulnerable to those same antitrust concerns.
“There are problems,” said Scott Keller, president of the New York-based research firm DealAnalytics. United Technologies and Honeywell “have basically the same overlaps that GE had with Honeywell.”
A United Technologies spokesman declined comment on the company’s plans. The company, which employs 160,000 people worldwide, including 2,800 in California, probably will wait until the EU’s July 12 deadline to make a decision.
With the deadline so far off, some analysts and EU officials held open the possibility that GE and Honeywell could resolve their impasse with the EU.
European Union Commission spokeswoman Amelia Torres said Friday that GE and Honeywell had a “limited opportunity to submit modified proposals” to European antitrust officials.
“I still think it’s possible this deal could go through,” said Paul H. Nisbet, an aerospace analyst at JSA Research Inc. in Newport, R.I. “A lot of negative repercussions could result if this deal falls” because of European opposition.
Amid the speculation over a renewed bid, shares of United Technologies fell $2.35 to $74.75 in trading Friday. General Electric’s shares fell 5 cents to $48.81. Honeywell rose $1.60 to $38.70, all on the New York Stock Exchange.
