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Friday, 29 June, 2001, 07:08 GMT 08:08 UK
EU 'rejects latest GE offer'

European Union officials have reportedly rejected General Electric's latest attempt to save its planned take-over of aircraft electronics giant Honeywell.

Unless GE comes back with a new offer, the decision by the European Commission would seal the fate of GE's $41.2bn bid for Honeywell.

The EU's competition commission votes on 3 July on whether to formally block the transaction, a vote that would scuttle an offer already approved by the US Department of Justice.

The rejection of the offer was reported by news agencies to have come from a source close to the deal.

A GE spokesman declined to comment. Honeywell was not available for comment. An EU spokesperson said that no decision had yet been taken.

Honeywell shares, which had closed the day up $1.20 to $38.20, fell more than 8% to $35 in after-hours trading.

'Not enough'

EU officials are understood to have told GE its latest offer, to sell off part of its aircraft leasing business, did not go far enough.

GE had offered to sell 19.9% of the business, GE Capital Aviation Services, or Gecas, a business that drew much criticism from European regulators.

GE proposed to sell a piece of that business through a private transaction.

But the offer fell short of the commission's hopes of seeing part of Gecas sold to either shareholders or industry rivals, the sources are reported to have said.

The commission said GE's latest offer did not do enough to separate Gecas from the rest of the company.

Hopes dashed

Commission officials were believed to be worried that the Gecas stake could go to a "friendly institution".

Commissioner Mario Monti had wanted GE to sell part of Gecas to rival Rolls-Royce or Pratt & Whitney, the engine unit of United Technologies, according to a document obtained two weeks ago by Reuters news agency.

The two companies are GE's biggest rivals in the aircraft engine business.

GE's last-minute offer was, on the face of it, exactly what the EU was initially looking for - the establishment of a degree of separation between the company and Gecas, which is a large purchaser of airplanes.

If it has accepted the decision by the competition commission, the European Commission has apparently dashed any hopes GE and investors had of saving the deal.

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