GE/Honeywell: dead at the altar

W

Thread Starter

Walt Boyes

The European Community (surprise, surprise!) has killed the proposed merger of GE and Honeywell. Obviously, it is in the interest of the European
Community to have most of the big, healthy (well, as healthy as you can get this year anyway) automation companies owned and controlled by the EC, so it isn't a complete shock to have the EC play dealbreaker.

What does this mean for the automation community? Will GE continue in the automation business? Can Honeywell, in the shape it is in, continue on alone? Or will the EC bless a Siemens/Honeywell merger where they wouldn't
allow one with GE?

Inquiring minds want to know.

Walt Boyes

---------------------------------------------
Walt Boyes -- MarketingPractice Consultants
[email protected]
21118 SE 278th Place - Maple Valley, WA 98038
253-709-5046 cell 425-432-8262 home office
fax:801-749-7142 ICQ: 59435534
--------------------------------------------

 
Walt Boyes mentioned that the GE/Honeywell deal has stalled in Europe.

Jim Pinto comments :
In my eNews (28 March 01) I predicted that GE would "dump" Honeywell. I stand by that.

GE wanted to buy Honeywell primarily because of the Avionics business - not because of Honeywell IAC (Industrial Automation & Controls). I have suggested previously that, if the Honeywell acquisition went through, GE would sell of IAC.

When GE recognized that Honeywell's condition was not as healthy as anticipated, they needed to find a way to back off from the deal. We must recognize that making a "low ball" offer (to the EC) is simply GE's way to back out of the deal,
without making it look like Jack Welch is "welching".

Walt Boyes asked , and Jim Pinto responds :
>What does this mean for the automation community?

Jim:
It means confirmation that the Automation majors are declining. Further acquisitions (consolidations) are imminent.

Walt :
>Will GE continue in the automation business?

Jim:
Yes, through GE-FANUC

Walt :
>Can Honeywell, in the shape it is in, continue on alone?

Jim :
No.

Walt :
>Or will the EC bless a Siemens/Honeywell merger where they wouldn't
>allow one with GE?

Jim :
Yes, they would, because Siemens does not have any Avionics, and they recognize that Automation is in a merger/consolidation mode.

See the previous "Will GE Dump Honeywell?" story at :
http://www.jimpinto.com/commentary/honeywellsale.html
More commentary and prognosis on GE/Honeywell in the next issue of JimPinto.com eNews (next day or so). http://www.jimpinto.com/enews.html

Cheers:
jim
----------/
Jim Pinto
Tel : (858) 353-JIMP (5467)
email : [email protected]
web: www.JimPinto.com
San Diego, CA., USA
----------/
 
D
I think that United Technologies will continue with their bid for Honeywell. That will be approved if the parties can work out the details. If that happens, I believe that UTX will sell off the portions of Honeywell they are
not interested in (such as IAC) to interested parties. It is rumored that this will put IAC firmly in Siemens pocket. So it looks like we are back to where we were in September of last year.

UTX could make the argument that HON is worth less than the bid they put in last year, and they would be correct. But they will probably stay with the same bid as a face saving gesture for HON.

It will be better for IAC the quicker this matter is resolved. Uncertainty of the company's future is disturbing all aspects of their business right
now. All this combined with a rapidly shifting technology base in industrial controls only makes the question mark over Honeywell IAC even bigger.

I would be interested to hear Jim's take on this, but for everyone it is just pure speculation.

D. Beebe
 
D. S. Beebe <[email protected]> commented :

>I think that United Technologies will continue with their bid
>for Honeywell. That will be approved if the parties can work out
>the details.

Jim Pinto comments :
Yes, in my view, Honeywell will need to find another partner when the GE deal falls through. (Notice - I did not write 'if', I wrote 'when').

United Technologies will review their earlier bid (which started the game. They will have had time to recognize (they have monitored GE's progress) that some of the Honeywell pieces are not as valuable and will therefore revise their bid. The earlier bid was made in a "romance" mode. Their new bid will be more in a "realism" mode.

DS Beebe :
>UTX could make the argument that HON is worth less than the bid
>they put in last year, and they would be correct. But they will
>probably stay with the same bid as a face saving gesture for HON.

Jim :
No, they do not need to "face save" here. When the GE bid falls through, Honeywell's face will already be muddy.

DS Beebe :
>If (United Tech) happens, I believe that UTX will sell off
>the portions of Honeywell they are not interested in (such as IAC)
>to interested parties. It is rumored that this will put IAC
>firmly in Siemens pocket. So it looks like we are back to
>where we were in September of last year.

Jim :
Right on!
United Tech is interested in the Honeywell Avionics, not the industrial controls (IAC). So, they will divest IAC - Siemens and Schneider are the most likely candidates.

Corollary : If Siemens (or Schneider) buys Honeywell (the whole thing) then they will divest Avionics and other non-strategic (for them) parts.

DS Beebe :
>I would be interested to hear Jim's take on this,
>but for everyone it is just pure speculation.

Jim:
There is some "speculation" - but a lot of it is extrapolation of the known data-points. Plus some insider e-reports.

DS Beebe :
>It will be better for IAC the quicker this matter is resolved.
>Uncertainty of the company's future is disturbing all aspects of
>their business right now. All this combined with a rapidly shifting
>technology base in industrial controls only makes the question mark
>over Honeywell IAC even bigger.

Jim :
Yes - you're right!
There are some good people in Honeywell IAC, and they are the real losers in this shuffle - they know that they are now in limbo.

Take a look at the latest eNews which includes Pinto Prognostications on the GE/Honeywell story :
http://www.jimpinto.com/enews/june18-2001.html
Cheers :
jim
----------/
Jim Pinto
Tel : (858) 353-JIMP (5467)
email : [email protected]
web: www.JimPinto.com
San Diego, CA., USA
----------/
 
S

s.muthukumar

Yes you r right/ GE may not able to sustain in the automation fields what do u say? Honeywell name will spoil

smr
 
Top