GE and Honeywell: A failed merger attempt

Mergers and Acquisition

PRESENTED TO : MRS. CELINA JOYMMS FINANCE – GROUP 7

GE and Honeywell : A failed merger Attempt

Introduction

Question – answers and discussion

Proposed Merger – part 2

GE background

Proposed merger - part 1

Conclusion

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Honeywell background

Presented by : Vaibhav Coming up : EC dashes merger

• Biggest merger in industrial history, valued at over $40 billion

• Deal would increase size of GE by one third.

• GE was attracted by Honeywell’s aerospace business.

• The merger was passed by united state department of justice.

Introduction to the caseIntroduction

Presented by : Vaibhav Coming up :GE background

• July 3rd, 2001, EC dashed all the hopes of merger between GE and Honeywell.

• Mario Monti’s view Creation of strong and powerful entity

together, Huge combined market share, Near monopoly in market.

• EC’s demand & restriction.

• An epic disspproved merger.

Introduction continuedIntroduction

18721892

1894

1922

1940

19521964

1972

1981

1990’s

2000’s

GENRAL ELECTRICGE Background

Presented by : KetkiComing up :Honeywell background

19061916

1927

1942

19531957

1986

1999

2000

HoneywellCompany overview

Presented by : Mehul Coming up : Proposed Merger

FINANCIALSGE & HoneyWell

Presented by : ImranComing up :proposed merger

50.128

76.81678.03

4.6593.2235.933

Gross Profit GE ($ in Millions)Gross Profit Honeywell ($ in Millions)

131.698125.913129.853

22.27423.65225.023

Revenue GE ($ in Millions)Revenue Honeywell ($ in Millions)

DEC -00 DEC-01 DEC-02 DEC -00 DEC-01 DEC-02

FINANCIALSGE & HoneyWell

Presented by : ImranComing up :financials continued

14.11813.68412.735

-0.22

-0.099

1.659

Net Income for equity shareholders GE ($ in Millions)Net Income for equity shareholders Honeywell ($ in Millions)

DEC -00 DEC-01 DEC-02

29.10730.76330.166

-0.601

-0.017

2.879

PBIT GE ($ in Millions)PBIT Honeywell ($ in Millions)

DEC -00 DEC-01 DEC-02

Proposed merger - I

Presented by : Gouri Coming up :Proposed Merger part 1 continued

Expected Synergies

Honeywell’s businesses were a good fit with GE’s own businesses in aircraft engines, industrial systems and plastics.

90 % overlap with GE as compared to 70% overlap with UTC

Perfect fit into the gaps in product line

Aerospace business of Honeywell was a major attraction.

Proposed merger - I Continued..

Presented by : Gouri Coming up :Proposed Merger part 2 continued

Financial synergies - Around 1.5 billion $ but by mid-2001, it was upgraded to 3 billion $.

Benefits to GE:

• balance between manufacturing and financial segments

• access to industrial assets and technological expertise• Contribution of GECAS will reduce

The European Union (EU) law.

Merger passed by US Department of Justice.

The European commission (EC) Report.

Proposed merger- II EC plays a spoil sport in dream merger

Presented by : RajeevComing up :Proposed Merger part 1 continued

Horizontal overlap

Vertical integration

Conglomerate effects

Proposed merger-IIEC’s justification for barring the merger

Presented by : RajeevComing up :Proposed Merger part 2

Presented By : Gouri

Demands and Counteroffers

Merger failed since GE did not accept EU’s suggestions.

GE proposed to divest itself from home parts of avionic systems but rejected to spinoff GECAS.

Demanded GE to divest parts of GECAS

EC demanded the two companies to divest some of their aerospace operations.

Coming up :Repercussions Of The Failed Merger

Presented By : Manish Coming up : Conclusion

• Economic situation in U.S.

• Political motives behind the rejection

• Invitation to retaliation

• Degrading performance of Honeywell post failure of merger

Repercussions Of The Failed Merger

CONCLUSION

Presented By : Akash

THANK YOU!

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