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General Electric acquires Honeywell

December 2000 News

The General Electric Company and Honeywell recently announced that GE has agreed to acquire Honeywell in a tax-free merger valued at $45bn dollars, plus assumed debt. As part of this definitive agreement, Honeywell shareowners will receive 1,055 shares of GE stock in exchange for one share of Honeywell. Along with other customary deal protections, GE will receive an option for 19,9% of Honeywell's outstanding stock.

The announcements were made by John F. Welch, Chairman and CEO of GE, and Michael R. Bonsignore, Chairman and CEO of Honeywell. Bonsignore will become a member of the GE Board of Directors. Two additional Honeywell Directors will join Bonsignore on the GE Board. The Boards of Directors of both companies have approved the merger agreement, which is subject to regulatory approval and the approval of Honeywell shareowners. The merger is expected to be completed in early 2001.

"Honeywell's core group of businesses - avionics, automated controls, performance materials and its new microturbine technology - are a perfect complement to four of GE's major businesses," Welch said. "Not only are the businesses a perfect fit, but so are the people and processes. GE's operating system and social architecture, coupled with both companies' common culture based on the initiatives of Six Sigma, services, globalisation and e-business are also a perfect fit."

Said Bonsignore: "This transaction preserves and strengthens the Honeywell brand worldwide while providing superior value to our shareowners, customers and employees. Honeywell's rich global heritage of technology and innovation will be substantially enhanced as part of GE. I look forward to working with Jack Welch as a member of the GE Board to ensure a seamless transition and to make a continuing contribution to one of the world's greatest companies." Welch will stay on as Chairman and CEO of GE until the end of 2001, through the Honeywell transition.

Silas S. Cathcart, the longest-serving GE Director and Chairman of GE's Management Development and Compensation Committee, said: "We have three objectives: to make the largest acquisition in GE's history when the time is right; to proceed on schedule with succession actions to name a Chairman-elect before year end; and to use Jack Welch's vast experience for several more months to ensure that this, our largest acquisition, is also our most successful."

GE expects to account for the Honeywell acquisition as a pooling of interests. Operations are expected to have double-digit accretion to the company's earnings per share in the first full year, excluding any one-time charges. GE will use the 'GE-Honeywell' brand name in some key product lines.

GE, with anticipated 2000 revenues of $130bn, is a diversified technology, services and manufacturing company with a commitment to achieving customer success and worldwide leadership in each of its businesses. GE operates in more than 100 countries and employs 340 000 people worldwide.

Honeywell is a $25bn diversified technology and manufacturing leader, serving customers worldwide with avionic products and services; control technologies for buildings, homes and industry; automotive products; power generation systems; speciality chemicals; fibres; plastics; and electronic and advanced materials. Honeywell employs approximately 120 000 people in 95 countries.





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