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EU Blocks GE/Honeywell Merger

Voice of America, July 3, 2001

As expected, the European Commission has formally blocked General Electric's proposed $41 billion merger with Honeywell International, amid news reports that Honeywell will oust its chief executive because of the failed deal.

The veto by the EU's 20-member executive Commission was widely expected after the American companies failed to calm European fears the deal would create an unfairly dominant position in the lucrative market for jetliner engines and avionics.

The European Union has veto power over U.S. mergers that would result in a company that earns more than $225 million in annual revenue from Europe.

Meanwhile, the Wall Street Journal, citing people familiar with the matter, reports Honeywell's Board of Directors plans to fire Chief Executive Michael Bonsignore. Honeywell stock has fallen sharply since May amid concern European regulators would block the merger with GE.

President Bush has expressed concern over the EU action, while some U.S. senators accuse EU regulators of protectionism and warn of a possible impact on trans-Atlantic relations.

Analysts say the rejected deal is a blow to GE Chief Executive Jack Welch, who delayed his retirement to oversee the Honeywell purchase.

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