GE & Honeywell: A Failed Merger|Business Strategy|Case Study|Case Studies

GE & Honeywell: A Failed Merger

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Case Details:

Case Code : BSTR085
Case Length : 14 Pages
Period : 1976 - 2003
Organization : GE, Honeywell International Inc, European Commission
Pub Date : 2004
Teaching Note : Available
Countries : USA
Industry : Aviation

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Repercussions of the Failed Merger

Some analysts felt that there could have been more to GE's abandoning of the deal than what met the eye. One suggestion was that the economic situation in the US and the world had worsened since the merger was first proposed.

GE probably felt that buying Honeywell was too great a risk at a time of economic downturn. This was probably why GE did not fight the opposition too hard in spite of Honeywell's urge to resubmit the proposal after revising the price downwards. The EC was also severely criticized by analysts, mainly in the US. Some of them felt expecting a merger between two American companies to seek approval from authorities around the globe was going too far. Boeing, an aircraft manufacturer based in the US, felt that the EC was trying to protect European aircraft manufacturing companies, notably Airbus, or European engine-makers from the combined market clout of GE-Honeywell...

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The GE Honeywell merger was historical for a variety of reasons, notably the size of the deal and the fact that it marked the first time that transatlantic authorities differed in their analysis of a merger.

The issue also brought to light transatlantic differences in anti-trust laws. This raised important questions about the viability of companies seeking approval from various agencies around the world before taking major decisions.

For instance, according to analysts, the focus in anti-trust cases in the US was on customers' interests. Mergers or corporate decisions which affected customers adversely were usually viewed unfavorably.

In Europe, however, they said the focus seemed to be on preserving competitors and protecting their interests, as was proved by the GE-Honeywell case...

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Exhibit I: Annual Financials - GE
Exhibit II: Annual Financials - Honeywell
Exhibit III: Major Business Segments in Which GE and Honeywell Operate

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