GE-Honeywell: Hope lives on

by BBC News Online's Briony Hale

Rumours and speculation are rife that General Electric's $44bn takeover of Honeywell is still somehow going to go ahead, despite the objections raised by the European Commission.

The companies themselves have publicly given up hope, clearly stating they do not expect to merge and issuing statements about the futures of the two firms when forced to live apart.

The European Union's competition commissioner, Mario Monti, has not shown the slightest sign of weakening his position, and the EU responded frostily to the idea of US political intervention.

But the tide of companies and US politicians eager to air their opinions about why the deal should actually be passed is not letting up.

The EU competition authority has until 12 July to issue its final verdict on whether to block the deal, which was approved by US officials last week.

Political intervention

US Commerce Secretary Don Evans was the latest to pitch into the debate, saying on Thursday that he was troubled by the sharply different view of European antitrust officials and US competition authorities.

Mario Monti: Can he be swayed?

But he also appealed for calm on the issue, saying that the US had to be careful not to overreact.

The previous day, a US Senator warned the EU in a letter that his country might retaliate if it appeared that the merger between American companies was unfairly blocked in order to protect the position of European competitors.

President Bush was the first to wade into the argument during his first visit to Europe last week, expressing his "concern" that the companies were treated fairly.

Air show speculation

The merger was also a hot subject for debate at this week's Air Show in Paris.

And many executives were eager to proffer a theory about how political sway would push the deal ahead.

President Bush: Expressed concern

The existing rivalry between Boeing and Airbus entered the GE-Honeywell arena when Boeing accused Airbus of trying to block the deal.

The charge was promptly denied by Airbus, the accusation withdrawn, and ended when both companies politely stated that they saw no reason why the merger should not go ahead.

Some of GE's major customers have also voiced support to counter accusations that they had objected to the merger.

Meanwhile, the mainly UK based engine maker Rolls-Royce told reporters that it wanted a "level playing field," but failed to clarify its position any further.

"There is still manoeuvring, posturing in public and in private and through politics and the press," said one executive at the airshow.

Media attention

It is now over a week since it emerged that the deal was on the brink of collapse.

GE boss Jeffrey Immelt could hardly have used stronger language to persuade public opinion - and the press - that the deal was off.

Senator John Rockefeller wants to explore "an effective US response" to an EU decision

But in London on Friday, the Financial Times headlined with the fact that General Electric had pledged to stick with its Honeywell bid.

The London daily also reported that GE was lobbying national antitrust experts ahead of a meeting with the Commission on Monday.

And the US papers are coming out in support of US political intervention.

The Herald Tribune writes on Friday that the EU's competition policy is full of "contradictory goals" and says its "vague language" sends confusing messages to companies.

Meanwhile, the Wall Street Journal says that the European Commission used the "stealth weapon" of bundling to counter the bid, a concept the paper claims GE chief had never heard of in relation to the aerospace industry.

Just talk

But all of the above really is just talk.

Jeffrey Immelt: Not at any price

Because amongst the deluge of industry observers, analysts, politicians and journalists commenting on the deal, precious few have managed to rustle up a compromise or possible solution to allow the deal to go ahead.

The EU must either radically reverse its position.

Or the companies must bow to the demands of the EU.

"We like this deal, we think this is a great deal, but we always said we wouldn't do it at any price," reiterated GE President Jeffrey Immelt on Thursday, hoping that someone might start thinking that the deal really is off.