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UTC rejects Honeywell offer
Euralarm manifesto for a more secure Europe
In what appears
to be a public
sparring match between Honeywell
International
and United Techno-
logies (UTC), both companies have
released comments on a meeting
that was held on the 19th February
2016 during which Honeywell pre-
sented an offer proposal to UTC.
The public battle began with
Honeywell releasing details of the
$90.7B acquisition proposal; this
was soon followed with rejection
comments from UTC later the
same day. The official proposal took
the form of a presentation that
Honeywell Chairman and CEO,
Dave Cote, shared with United
Technologies Chairman, Edward A.
Kangas, and United Technologies
CEO, Gregory J. Hayes.
The Honeywell, so called,
"Unique and compelling opportu-
nity for shareholders" cited that the
benefits of the combination would
produce a global leader in attractive
end markets tied to advantaged
secular growth themes. The
proposal maintains that the merger
would offer customers world-class
technology and software platforms
with a combined R&D capacity of
over $8B to invest and substantial
operating benefits and cost synergy
potential estimated at $3.5B.
The UTC decision to reject
the offer is based strongly around
regulatory challenges and implies
that Honeywell and its advisors
are not taking these challenges
seriously. The UTC Regulatory
Position statement confirms these
views. " Honeywell simply believes
it is in its interests to gloss over
these fundamental transaction risks
in connection with pursuing this
opportunistic approach."
UTC, CEO Gregory J. Hayes
adds, "United Technologies re-
mains firm in its belief that any
combination with Honeywell
would encounter insurmountable
regulatory challenges in the U.S.,
EU, China, Brazil, Canada and
other markets."
Hayes continues with further
comments about his concerns.
"There is a high likelihood that the
deal could fail and the prolonged
review process would have a
material negative impact on UTC's
operations, customer relationships
and talent retention. It is im-
portant to note that after the deal
between Honeywell and GE was
rejected in 2001 by the European
Commission, Honeywell's stock
price fell 38% over the 2000 to
2005 timeframe. In light of this, it
would be irresponsible for UTC to
move forward with this proposed
combination."
In addition to the potential
merger
facing re-
gulatory
problems
Hayes
also high-
lights
the view that
the offer bid
is much too
low. "Notwithstanding the signi-
ficant regulatory challenges and
customer concerns, Honeywell's
proposal grossly undervalues
UTC and overstates potential
synergies. Effectively Honeywell's
proposal is a leveraged buyout of
UTC using UTC's own strong
balance sheet."
It seems that although the of-
fer has been rejected there is still
momentum in this deal and that
tensions are mounting to produce
results.
Euralarm,
the association of Euro-
pean manufacturers, installers and
service providers of the electronic
fire safety and security industry,
is presenting its Manifesto for a
Safer and More Secure Europe,
20162019.
Euralarm's Manifesto for a
Safer and More Secure Europe at
the horizon of 2019, presents the
electronic fire, safety and security
industry's view on six policy areas
where the European Union's Insti-
tutions should take action in the
coming years to ensure that firstly
EU citizens are safer and live in a
secure society and secondly, that
the marketplace is efficient and
dynamic.
Euralarm will be an engaged
and constructive partner for the
EU Institutions, helping policy-
makers to craft the legislation that
meet these societal and economic
objectives as well as to shape
an open, efficient and dynamic
marketplace for the electronic fire,
safety and security industry in the
EU; a market growing by 11%
over the next five years according
to an EU Commission' recent
report.
The six policy areas include; a
market-driven standards system
that works for consumers and the
industry; a single market approach
to testing, auditing and certifica-
tion in the fire safety and security
industry; improving fire safety in
tourist accommodation to prevent
unnecessary deaths and injuries; a
Europe-wide system to recognise
skills and qualifications; a single
market for the provision of services
for fire safety and security systems;
and `Smart cities' that include
aspects of fire safety and security.
For each area Euralarm offers
its support to the EU Institutions.
This newest publication is another
Euralarm initiative that backs the
EU goals of boosting employ-
ment, growth and investment,
and strengthening and deepening
the Single Market. With the right
political, legislative and regula-
tory environment, the fire safety
and security industry can play an
important role in achieving these
goals.
business
news
Gregory Hayes
CEO of UTC.
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