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EC rejects GE's bid
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June 28, 2001: 7:01 p.m. ET
Euro regulators won't accept GE's revised bid in $42B Honeywell takeover, report says
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NEW YORK (CNNfn) - The European Commission rejected Thursday the revised offer from General Electric Co. that attempted to salvage its $42 billion takeover of Honeywell International Inc., press reports said.
The EC officially informed GE that they would not accept the modified bid, which had GE offering to sell a near 20 percent stake in its airline leasing arm, the interactive version of the Wall Street Journal reported.
A spokeswoman for GE declined to comment. Staff at the EC and Honeywell also could not be reached for comment.
The latest setback means Euro regulators are set to block the deal July 3 in Strasbourg, France, unless GE can somehow salvage the negotiations. The EC can delay a decision until July 11 in Brussels, Belgium, as a final determination is not due until July 12.
Fairfield, Conn.-based GE began pitching draft ideas or options for GECAS to the EC on Wednesday that were "within the financial parameters of its June 14th proposal."
The informal discussions between GE and the EC have continued throughout this week. GE Chairman Jack Welch was not present in the discussions which consisted of EC staff and GE's advisors.
"There are discussions going on concerning our proposal submitted on June 14," GE spokesman Gary Sheffer said Thursday. "Part of our proposal is related to GECAS."
The nearly 20 percent stake in GECAS would be sold to an independent investor and would not be for sale to competitors or the general public. GE would also reduce the $2.2 billion in Honeywell assets it had offered to sell in its final offer, press reports said.
However, the reworked offer received a tepid response from the EC Thursday, the Financial Times said. The revised offer does not go far enough to ensure GECAS impartiality, the FT said.
Shares of Honeywell (HON: up $1.20 to $38.20, Research, Estimates) have risen for the past two days and continued gaining Thursday, climbing over 3 percent. But shares fell $3.20 in after-hours to $35. GE (GE: up $0.61 to $48.87, Research, Estimates) rose marginally.
The offer to sell 20 percent of GECAS comes two weeks after GE made its "final" offer to the EC. GE had offered to sell $2.2 billion worth of Honeywell's aerospace business which apparently was not enough for EC regulators.
The EC had expressed concern that GE could use its aircraft leasing arm to help it compete unfairly against other companies.
The Commission wanted the U.S.-based industrial conglomerate to either spin off its aircraft leasing arm 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 Morristown, N.J.-based Honeywell's aerospace products. 
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