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Monday, 23 October, 2000, 07:35 GMT 08:35 UK
General Electric buys Honeywell

General Electric (GE) has agreed to buy aircraft electronics giant Honeywell, in what is thought to be the largest industrial takeover yet.

GE has agreed to pay $45bn in stock for Honeywell, with the deal expected to be completed early next year.

The deal is thought to have been signed just hours after GE broke up merger talks between Honeywell and United Technologies (UTC).

UTC, which was offering about $40bn in stock or $50 a share, is thought to have been unwilling to take part in a bidding war.

Welch stays

As part of the deal, GE chairman John Welch will stay on as chairman and chief executive until the end of next year, postponing a planned retirement.

Honeywell's corporate headquarters will be closed, a move which could lead a loss of about 550 jobs.

"This transaction preserves and strengthens the Honeywell brand worldwide while providing superior value to our shareowners, customers and employees," Honeywell chief executive Michael Bonsignore said.

Mr Bonsignore will join the GE board of directors.

Honeywell and General Electric are members of the US business elite, listed in the exclusive Dow Jones stockmarket index of 30 top firms.

News of GE's bid broke shortly before the markets closed on Friday.

It lifted Honeywell's stock by 29%, or 10.31, to $46, giving the company a market capitalisation of about $36bn.

Late talks

GE chief executive Jack Welch only learned that Honeywell was in talks with UTC late on Thursday night.

He is believed to have called Honeywell's board on Friday morning to discuss a bid, just as it was considering UTC's offer.

"When you get a call from Jack Welch and he says 'don't do anything because I am prepared to meet you and top the bid' you don't have to wonder if he is serious," a source said.

GE is thought to have pounced on Honeywell ahead of several other potential suitors, including US company Tyco and German tech giant Siemens.

"This is how GE gets a bigger footprint in the global marketplace, increasing its size by nearly a third overnight and adding to its dominance in key areas," analyst Nicholas Heymann at Prudential Securities said on Sunday.

Share-price boosted

Honeywell is a manufacturing conglomerate with more than 100,000 employees. The group supplies the aerospace industry, makes industrial automation and control systems and is a supplier of the automotive sector, amongst others.

GE is one of the world's largest industrial conglomerates, with more than 197,000 employees.

It is the world's largest jet engine maker. Its other businesses include domestic appliances, with the Hotpoint brand among others, financial services and broadcasting, with US TV network NBC.

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