GE and Honeywell: A failed merger attempt Mergers and Acquisition PRESENTED TO : MRS. CELINA JOY MMS FINANCE – GROUP 7
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
1
2
3
4
5
6
7
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!
Your Logo