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U.Technologies, Honeywell Talks Off

October 20, 2000

TRENTON, N.J. (AP) _ United Technologies Corp. said Friday it has called off discussions to acquire Honeywell International Inc.

The two companies were considering a deal, reportedly worth about $40 billion, that would have brought together two major manufacturers of industrial and aerospace products.

In a short statement, United Technologies said that Honeywell had informed the Hartford, Conn.-based company that it was considering an alternative merger proposal received Friday morning. United Technologies did not elaborate further.

In a separate statement, Honeywell confirmed it had received another proposal, and that United Technologies had halted talks, but did not provide additional details.

It wasn’t immediately clear which company had made an offer for Honeywell, though analysts have identified Tyco International Ltd. as a possible suitor.

Judith Czelusnik, senior vice president of corporate relations for Tyco International Ltd., declined to comment on what she called ``rumor and speculation.

Honeywell and United Technologies confirmed they were discussing a possible combination in a press release Thursday evening, but didn’t provide any details.

The Wall Street Journal reported that United Technologies was offering 0.74 of one of its shares for each share of Honeywell, citing people familiar with the talks. At Thursday’s closing United Technologies price, that would have been worth $50.32 for each Honeywell share.

Both companies are included in the 30-component Dow Jones industrial average. In afternoon trading Friday on the New York Stock Exchange, shares of United Technologies were down $7 to $61, while shares of Honeywell were up $5 to $41.13.

Honeywell International was created last December, when Minneapolis-based Honeywell was acquired by AlliedSignal, which is based in Morristown, N.J. The company, which set up headquarters in Morristown, has about 120,000 employees worldwide and earned $1.54 billion on revenue of $23.74 billion in 1999.

United Technologies makes Pratt & Whitney jet engines, Carrier air-conditioners, Otis elevators and Sikorsky helicopters. The company, which has 148,300 employees worldwide, earned $1.53 billion on revenue of $23.84 billion in 1999.

Analysts had lauded the potential combination.

``From an aerospace and defense perspective, it would be a blockbuster deal,″ said Jon Kutler, president of Quarterdeck Investment Partners, a Los Angeles-based merger and acquisition firm in aerospace and defense. ``You can buy everything from engines to lighting systems at the same place.″

The two companies have had previous dealings. In February, they announced a joint venture called MyAircraft with a third company, i2 Technologies Inc. of Dallas, a maker of Internet commerce software.

MyAircraft is an electronic marketplace for aerospace products and services and is expected to start operating before the end of the year.

Honeywell also worked with the United Technologies subsidiary Hamilton Sundstrand on a flight control system for mid-size, regional aircraft. In addition, Honeywell developed an autopilot landing system for helicopters with UTC’s Sikorsky Aircraft.


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