General Electric's Proposed Acquisition of Honeywell

From the liberal point of view, the FTC and the EC should recognize the Boeing-McDonnell Douglas merger as an international issue, not a national issue, so that it should restrain autonomy of state, in this case the U.S., preventing from intervention to protect domestic interests. However, in the case of Boeing-Mc Donnell Douglas, both antitrust authorities, specifically the European Commission, acted in a protectionist manner keeping domestic interests. In a study on 290 proposed acquisitions screened by the EC during 1990, it was found that although European merger and acquisition regulators claim to be protecting competition and consumers, in fact, the more harm suffered by European rival firms when the acquire is coming from the outside the EU, the greater the likelihood of European regulatory intervention against the proposed merger or acquisition . The EC’s focus on competitors rather than consumers was revealed by this study.

If the merger had taken place as per the current EPS values only, i.e. at the Exchange ratios as given below:

However, a stock drop in the U.S. market is not historically unusual for impending mergers. So, all things considered, it looked like this might be a great combination.

In September 2008, optimistic about BYD’s application of new energy, Warren Buffett acquired 225 million (10%) of its shares at HK$ 8 per share.

Analyzing GE’s corporate-level strategy from 2001 – present with Jeff Immelt as CEO, GE focuses on the growth and development platforms. Technology is the key driving force for GE’s future and growth. Advancements in industries such as energy, health and aviation fueled demand for cleaner and more efficient energy production. GE identified new markets with potential high-growth that offered attractive returns through strategic mergers and acquisitions. As CEO, Jeff Immelt established a process for identifying projects that offered attractive growth potential which were then nurtured and treated as special projects or initiatives that were not subject to strict budget constraints. Immelt introduced GE’s three strategic imperatives as: (1) sustaining its strong business model, (2) strengthening the business portfolio, and (3) driving its growth initiatives. www.ge.com

A) What is the possible meaning of the changes in stock price for GEICO and Berkshire Hathaway on the day of the acquisition announcement?

Merger motives that are questionable on economic grounds are diversification, purchase of assets below replacement cost, and control. Managers often state that diversification helps to stabilize a firm's earnings and reduces total risk, hence benefits shareholders. Stabilization of earnings is certainly beneficial to a firm's employees, suppliers, customers, and managers. However, if a stock investor is concerned about earnings variability, he or she can diversify more easily than the firm can. Why should Firm A and Firm B merge to stabilize earnings when stockholders can merely purchase both stocks and accomplish the same thing? Further, we know that well-diversified shareholders are more concerned with a stock's market risk than with its total risk, and higher earnings instability does not necessarily translate into higher market risk.

A) What is the possible meaning of the changes in stock price for GEICO and Berkshire Hathaway on the day of the acquisition announcement?

Also; Citigroup, Inc. another competitor for the GE Company made a total of $64.95 billion in 2011, and when we compare it with GE and SI its earnings where even less in the same year, making General Electric a leader in the industry. With this valuable information GE management can analyze its competitor’s financial statements results and from there they can evaluate their faults and create new ways to increase their annuals earnings and secure their place as one of leading companies in their industry. Another way GE can go forward in the industry is by adapting its services and products to other countries that need them.

At the beginning the offer was a reaction to the CSX bid; then other factors came into play, such as time, the time span until the vote of the shareholders, the legal procedure (since the judge ruled against Norfolk Southern). Secondly, the outcome of this process will determine the future development of the companies involved. The merged companies, the winners, will survive, whereas the loser will disappear from the market. Based on this fact we might assume that each

With all of these major oil deals come the risk of antitrust scrutiny. The Baker Hughes and Halliburton merger is no different.

The decision to sell the shared faced strong opposition from Hershey employees, local businesses, and politicians. The community did not want foreign company to take over Hershey Company due to the legacy of Hershey involvement in the community will be compromised and many jobs might be lost.

In order to recognize the cost synergies, Dow had one time cost of $1.3 billion spread within two years. They will achieve at least 800 million cost synergies. Growth Synergies are estimated to be between $2B and $2.6B based on expanded market portfolios, increased geographic reach and innovative technologies. Adjusting the cost synergies we calculated an equity value per share $94.63 per Rohm and Haas share.

Honeywell has again impressed its investors with its strong financial and operational performance in the second quarter of this year. Last Friday, the company maintained its history by posting a sales and earnings growth of 2% and 10%, respectively, compared to the same quarter of last year.

GE has officially announced the merge and acquisition with Honeywell on October 22, 2000 and if it has been gone through, GE will be the biggest company in aerospace industry with more than 60% of total market share. Undoubtedly, GE will be more monopolists and may bring about the unfair competition with the rivals. Hence, both the United States (represented by the Department of Justice (DOJ)) and European countries (represented by the European Commission (EC)) have a "Antitrust Law ' subject to protect the merger