Honeywell Still Committed to GE Merger Despite European Objections

Honeywell International Corp. on Monday reaffirmed its full commitment to its troubled deal with General Electric Co., despite objections by European Union regulators with competition concerns about the $41-billion merger.

Honeywell’s board of directors “expects that GE will do everything possible to secure regulatory approval for the transaction,” the company said in a statement after the board of directors met at the company’s Morris Township, N.J., headquarters.

The board was reviewing “a broad range of contingency” plans related to the merger, spokesman Tom Crane said. Analysts looking at the company’s options suggested that the high-tech manufacturer might position itself to be bought by another suitor.

The proposed acquisition of Honeywell by GE faces serious opposition from EU regulators, who have expressed concern that the combined company will be able to exploit its dominance in aircraft engines to win advantages in other areas of its business, such as aircraft leasing and avionics.

The EU has until July 12 to rule on the merger, but GE has said it is not optimistic about its chances.

Honeywell, a maker of aerospace, electronics and automotive products, last fall was courting a bid from GE competitor United Technologies Corp., and analysts said the company would benefit by entertaining that or other offers.

“Looking to a merger is probably the best way to get value for Honeywell shares,” said Harriet C. Baldwin of Deutsche Banc Alex. Brown Inc.

David Bleustein of UBS Warburg said that if the merger deal with GE fails and no suitor emerges, “Honeywell would face significant challenges,” including restructuring its management to oversee an independent company after spending three quarters preparing to turn the reins over to GE.

The company also has a large base of shareholders who are expected to sell their holdings if Honeywell remains independent, he said.

Officials for Hartford, Conn.-based United Technologies, which pursued Honeywell until GE swooped in with a better offer, declined to comment Monday. Meanwhile, Tyco International Ltd., another company mentioned by analysts as a possible suitor, said it had no interest in Honeywell.

Shares of Honeywell rose $1.30, or 3%, to close at $40 in trading on the New York Stock Exchange, where GE rose 19 cents to close at $49.