The General Electric Co. and Honeywell announced Oct. 22 that GE has agreed to acquire Honeywell in a tax-free merger valued at $45 billion, plus assumed debt. As part of this agreement, Honeywell shareowners will receive 1.055 shares of GE stock in exchange for one share of Honeywell.

GE beat out United Technologies for Honeywell by offering 10% more than Carrier Corp.'s parent.

Honeywell and United Technologies confirmed Oct. 20 that they were in merger discussions after the news broke the day before on CNBC. According to news reports, United Technologies was going to pay 0.74 share for each share of Honeywell.

The deal fell apart when United Technologies said it was bowing out because of a competing bid.

Part of the problem was concern about the progress of integration efforts at Honeywell, which had been formed last December from the merger of Minneapolis-based Honeywell and New Jersey-based AlliedSignal. The integration reportedly had been slow and rocky. That concern caused United Technologies' stock price to drop, which made the company's offer worth less.

General Electric will receive an option for 19.9% of Honeywell's outstanding stock, along with other customary deal protections.

John F. Welch, GE's chairman and CEO, and Michael R. Bonsignore, chairman and CEO of Honeywell, made the announcement. Bonsignore will become a member of the GE board of directors. Two additional Honeywell directors will join Bonsignore on the GE board.

The merger is expected to be completed in early 2001.

Welch will stay on as chairman and CEO of GE until the end of 2001, through the Honeywell transition.