Decision day for GE

The European Union's 20-member executive is due to vote on Tuesday whether to block the $41bn deal between General Electric and Honeywell.

The vote comes nine months after the takeover was first proposed.

Just three months ago both companies were confident that the deal would win the green light with ease.

Now, both companies have publicly admitted that they expect the deal to be blocked.

But the thoughts and workings of the European Union are never officially revealed until the set date, and the deluge of information that has emerged about the EU's opinion of the deal has nearly all rested on rumours and speculation.

A decision is expected early on Tuesday afternoon.

Dropping out?

Last minute speculation centered on whether GE would pull out of the deal before the official vote.

Sources close to the two companies said on Tuesday that both sides were "actively considering" whether to withdraw and save the EU the chore of voting.

Mario Monti: The man with the power

GE is reported to be particularly interested in pulling the proposal so that no formal decision - which could then affect future rulings - is entered against it.

But a withdrawal by GE also opens the risk of being sued by Honeywell for breach of the merger contract.

The chairmen of the two respective companies already entered into a public row last week, with Honeywell wanting to push harder for the deal than GE.

Influential commentators

The debate as to whether to allow the deal has attracted huge interest from the outside world

Jeffrey Immelt: Not at any price

The EU has faced criticism and the threat of retaliatory action from senior US politicians.

Amongst the line up of commentators on the deal was President George W. Bush and the heads of Airbus, Boeing and Rolls Royce.

The US competition authorities approved the deal in May, prompting much speculation as to why the EU and US antitrust bodies should differ so much.

But the EU Competition Commissioner Mario Monti has shown no hint of wavering in the light of the criticism.

Over-demanding

It's on the agenda and they will vote Tuesday," said EU spokesman Michael Tscherny.

President Bush: Expressed concern

The EU is widely expected to block the deal, after GE said that they it was not prepared to meet its "extraordinary demands".

"I wanted to complete the transaction but we have always said there is a point at which we wouldn't do the deal," said GE's Chairman Jack Welch.

"This shows you are never too old to get surprised," he added.

Honeywell then said that it was prepared to go further towards satisfying the EU, offering up a final sacrifice.

But GE slammed the proposal, saying that it cut the strategic rationale out of the deal and made no sense.

This has been the last word from the companies on the merger - in public at least - causing almost all hope of an EU approval to fade.

Life after the merger

The fate of the two companies has differed greatly, during the nine month waiting period.

GE remains a healthy company with or without the appendage of Honeywell.

Senator John Rockefeller: highly critical of the EU

It announced a 16% rise in full year profits in April, and its share price has tended to rise on speculation that the deal will be blocked.

"GE remains confident that 2001, with or without Honeywell, will be another record year of double digit operating earnings growth," said the firm in a statement.

Honeywell, however, reported a dramatic slump in annual profits of 92% in April and was forced to cut 6,500 jobs.

And the firm partially blamed the proposed merger for its demise, saying that it had delayed selling underperforming business units that it had previously planned to ditch.

But while Honeywell claims that it has a "comprehensive contingency plan" if the merger fails, its share price weakens in line with speculation that the deal will be blocked.

And press reports have speculated that the head of Honeywell Michael Bonsignore will be forced to resign after the announcement.

GE chairman Jack Welch postponed has already postponed his retirement to continue working on the deal.

Start all over again?

f the merger is officially rejected, GE could either choose to challenge the decision in court or file a new application and start the process all over again.

But the chances that GE will submit a revised proposal are slim after GE rejected a last-ditch attempt by Honeywell on Friday.

At the time of the merger, the deal was valued at $45bn, but equity has since fallen to bring the takeover down to $41bn.

If the deal goes through, it is thought it could be the largest industrial takeover in corporate history.