GE seals deal to buy Honeywell

United Technologies Corp., however, had offered about $40 billion in stock, or about $50 a share, for Honeywell before its merger talks broke down on Friday after GE expressed interest.

GE and Honeywell could not be reached immediately for comment.

Honeywell, based in Morris Township, NJ, is a leading maker of avionics, or aircraft electronics, as well as turbochargers, speciality chemicals and automated control systems.

GE, a leading manufacturer of aircraft engines, would gain additional strength in the sector with an acquisition of Honeywell, but may have to make some divestitures to win the approval of anti-trust regulators. Among its many interests, GE also owns financial services power house GE Capital and the NBC television network.

GE Chairman Jack Welch, who only learned late Thursday that Honeywell was in merger talks with United Technologies, apparently called Honeywell’s board on Friday morning, to discuss a bid just as the board was considering the United Technologies offer.

"When you get a call from Jack Welch and he says ‘Don’T doanything because I’M Prepared to meet you and top the bid’, you don’T have to wonder if he’s serious," one source said.

"No one is going to say ‘You’re not serious; you can’T doit," he said. And, he noted, the Honeywell board would have a fiduciary duty to its shareholders to consider the offer.

Shares of Honeywell rose $10-5/16 or nearly 29 percent, toclose at $46 in regular trading on the New York Stock Exchange, giving the company a market capitalisations of about $36 billion.

Shares of GE fell $3-3/8, or more than 6 percent, to closeat $52-1/4 in regular trading on the New York Stock Exchange on Friday.

GE’s 11th hour offer on Friday came just one day afterUnited Technologies and Honeywell confirmed they were in merger talks.

United Technologies had offered 0.74 of a share of itsstock for each of Honeywell’s 801 million shares outstanding, according to people familiar with the situation.

The proposed deal valued Honeywell at about $40 billion, or$50.32 a share, in stock. But United Technologies shares fell sharply in trading on Friday, reducing the value of the bid to about $36 billion, or about $45 a share.

CNBC, an affiliate of General Electric, first reported thetalks between United Technologies and Honeywell late Thursday afternoon and then broke the news to Welch, who was on the floor of the New York Stock Exchange at the close of trading.

When told of the talks between United Technologies andHoneywell, Welch expressed surprise and told CNBC he would have to think it over.

Welch, who turns 65 on Nov. 19 and is scheduled to retirenext April, apparently didn’T have to think about it for long and it may have helped that he has ties with Honeywell’s former Chairman, Lawrence Bossidy.

Bossidy, a former top executive at GE, was chairman andChief executive of Allied Signal when the company agreed in June 1999 to acquire Honeywell.

The combined company retained the name Honeywell and hestayed on as chairman until April 2000.