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GE reignites talks with EC
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June 27, 2001: 6:00 p.m. ET
Informal advisors talk to EC in bid for approval of $42B Honeywell deal
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NEW YORK (CNNfn) - General Electric Co. confirmed that it held informal talks with the staff of the European Commission on Wednesday in an attempt to gain approval for its $42 billion takeover of Honeywell International Inc.
Informal advisors for GE discussed draft ideas or options that were "within the financial parameters of GE's June 14 proposal," spokesman Gary Sheffer said.
"We have said all along that we will continue to advocate for our proposal and we are continuing to do that," Sheffer told CNNfn.com.
Sheffer declined to comment on press reports that GE offered a structural commitment over GECAS, its aircraft leasing arm. GE is said to have offered to sell a minority stake in GECAS, the Financial Times said.
But some think the GECAS negotiations as reported are doubtful. "A stake sale in GECAS is not likely," a person familiar with the situation told CNNfn.com.
GE's Sheffer could not say whether there would be future meeting's between GE and the EC.
GE Chairman Jack Welch was not present in the negotiations. GE's informal advisors consisted of its lawyers, a source close to the negotiations said.
Honeywell declined to comment.
Shares for Honeywell (HON: up $0.80 to $37.00, Research, Estimates) have plummeted on news of the EC's block of the takeover, but gained more than two percent Wednesday while GE (GE: down $0.53 to $48.26, Research, Estimates) shares dropped marginally. In after hours trading on Instinet, Honeywell gained $2.50 to $39.50 while GE continued to drop $1.06 to $47.60.
However, prospects for GE's $42 billion takeover of Honeywell still appear dismal. On Monday, all but one of the 15 EU member countries backed the EC draft to block the merger.
GE agreed to buy Morristown, N.J.-based Honeywell, a maker of aircraft engines and products for industrial heating, last October. GE Chairman Jack Welch agreed to delay his retirement, originally planned for April, until the end of the year to see the Honeywell deal through.
The merger has received regulatory approval in the United States and Canada.
Fairfield, Conn.-based GE on June 14 submitted its final proposal of concessions it would make to receive EC approval. The Commission wanted the U.S.-based industrial conglomerate either to spin off GECAS or sell shares in the unit. Instead, GE proposed to set up a separate audit and management structure for GECAS and sell $2.2 billion worth of Honeywell's aerospace products business.
The European Commission is expected to sort out its final review this week and make its recommendation July 3 in Strasbourg, France. The EC still can delay until July 11 in Brussels as a final determination is not due until July 12, the source said. 
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