GE to Buy Honeywell for $45 Billion

N E W  Y O R K, Oct. 23 -- General Electric has agreed to acquireHoneywell International for $45 billion in stock as GEchairman John F. Welch Jr. postponed his planned retirement untilthe end of 2001 to oversee the merger.

The boards of GE and Honeywell approved the deal Sunday tocreate one of the world’s largest industrial companies followingsome intense last-minute dealmaking by GE, which scuttled the plansof industrial conglomerate United Technologies to buyHoneywell for about $40 billion. United Technologies called off itsnegotiations on Friday after Honeywell revealed it was talking to anew suitor.

GE will pay 1.055 of its shares — or $54.99 — for each ofHoneywell’s 801 million outstanding shares. Based on Friday’sclose. GE’s valuation of Honeywell represents a nearly 10 percentpremium over United Technologies’ bid.

Wall Street was uninspired by news of the deal. GE lost $3.31today to close at $49.19, while Honeywell rose $2.88 to $49.88. But the news had little, if any, impact on other stocks.

Bringing the Companies TogetherUnder terms of the deal, expected to close in early 2001, GEwill also assume an unspecified amount of Honeywell debt.Honeywell’s corporate headquarters in Morristown, N.J., will beclosed as part of the deal and about 550 employees there may losetheir jobs, said Honeywell spokesman Tom Crane.

But the top executives of both companies focused on the deal’supside today, emphasizing areas where GE and Honeywell haveoverlapping businesses but with few, if any, overlap in products.

“GE brings good things to life and we’re confident we bringgood things to GE,” Honeywell CEO Michael R. Bonsignore saidduring a news conference in New York.

Welch said Honeywell was too good to pass up, and deridedsuggestions that GE should’ve been shopping for a New Economycompany rather than a venerable manufacturer.

“This is a high-tech company. GE is a high-tech company. We’remerging two real high-tech companies, with real earnings that doreal things,” Welch said.