General Electric, Honeywell forge $45 billion deal

Honeywell International Inc. is merging with General Electric Co. through a stock-swap valued at $45 billion, plus another $3 billion in assumed debt. That acquisition, the biggest ever for GE, was hammered out over the weekend, company officials said Monday.

John F. Welch Jr., GE's chairman, made his 11th-hour bid about noon Friday, interrupting Honeywell directors as they were discussing an earlier offer from United Technologies Corp. The acquisition agreement was signed late Sunday after a frenzy of messages and meetings between the top officials of Honeywell and GE.

The merger is scheduled to be consummated in early 2001, subject to approval by Honeywell shareholders and the usual regulators in the US and Europe. Under that deal, Honeywell shareholders will get 1.055 shares of GE stock for each share of Honeywell stock held.

Honeywell's four core operations�aviation electronics, automated controls, performance materials, and its new microturbine technology�are "a perfect complement to four of GE's major businesses," said Welch. "Not only are the businesses a perfect fit, but so are the people and processes."

Welch, 64, who was to retire next April, will stay on as GE chairman through 2001 to see the merger completed.

Honeywell apparently was one of several possible acquisitions that Welch had planned to recommend to his successor, the New York Times reported Monday.

Honeywell officials had issued a statement Thursday that they were in negotiations with United Technologies on a possible merger.

Welch apparently learned some details of United Technologies' offer Friday morning and began contacting investment bankers and other GE directors. He then faxed the basis of a counter offer to Michael R. Bonsignore, Honeywell's chairman and CEO.

Although unsolicited, it proved to be an offer that they couldn't refuse, Honeywell officials said.

The Times reported that United Technologies did not learn the terms of GE's offer until it was too late to respond.

Under the acquisition agreement, Bonsignore and two other Honeywell directors will join GE's board of directors.

Following the merger, GE will use the GE-Honeywell brand on some of its products, officials said.