General Electric's Proposed Acquisition of Honeywell

1195 WordsApr 23, 20135 Pages
General Electric 's Proposed Acquisition of Honeywell Synopsis and Objective: October 19, 2000 Honeywell’s stock was up $10 due to recent merger discussions between Honeywell and United Technologies Corporation (UTC). For every share of honeywell, UTC would pay 0.74 of its own stock. In other words, the merge would lead to a dominant supplier company in the aerospace market, and a strong competitor for GE. This led John F. “Jack” Welch Jr., GE’s chair and CEO, to call Michael Bonsignore, chair and CEO of Honeywell, to present a bid maintaining a 1:1 share for share exchange ratio. GE won the bid against UTC and agreed to a price of 1.055 GE shares for every share of Honeywell’s, plus assumed debt. The regulatory filings were…show more content…
How would General Electric and Honeywell’s stock prices be affected by the investigation? Anytime a company is investigated by a regulatory commision it is generally a bad thing. The EC’s investigation of the stock prices would likely have an adverse affect on the stock price and stockholder confidence of the two companies. General Electric investors know that Jack Welch is only on board with the company until the acquisition with Honeywell is over. This means that General Electric will be soon losing its cash cow of a ceo and if the deal doesn’t go through then Welch will be going out on a bad note. This skepticism of whether or not the regulatory commision will accept the merger would only add to the question of General Electric moving forward positively in the future. Additionally, Honeywell may choose to go with UTC if the merger with General Electric falls through. If Honeywell does in fact go with UTC then the market position of General Electric will be compromised and their stock will once again fall. For the Honeywell company the merger question being questioned by a regulatory commision would likely lower their stock value as well. Investors in Honeywell may fear that the deal will fall through and Honeywell will have wasted its resources. Should Bancroft sell its shares in Honeywell or should they be maintained? Bancroft should sell all or at least its

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