Billion dollar merger talks between Honeywell and General Electric stalled plans for Ironton’s industrial park this spring, yet a recent breakdown in that merger could become the city’s good fortune.

Tuesday, July 03, 2001

Billion dollar merger talks between Honeywell and General Electric stalled plans for Ironton’s industrial park this spring, yet a recent breakdown in that merger could become the city’s good fortune.

The city planned to buy Honeywell’s 39.5 acres adjacent to Lorain Street, and turn that property into the South Ironton Industrial Park. Negotiations came about the same time as GE offered to acquire Honeywell.

"We wanted them to go ahead and sell so we could move forward with the park," Ironton Mayor Bob Cleary said. "But GE didn’t want any sales of Honeywell property until the merger was complete so the acquisition was put on a hold."

Last week, European resistance to GE’s takeover intensified. Honeywell offered Friday to accept a lower purchase price, and in return asked GE to divest more of its holdings to satisfy European antitrust regulators who are threatening to block the deal, but GE rejected that last-ditch revision.

That breakdown in talks could mean city property negotiations will resume; however, only time will tell.

If Honeywell doesn’t merge with GE, then they might want to sell right away, Cleary said.

"It would be the companies’ (Honeywell and GE) misfortune, but fortunate for us," he said. "The city is still definitely interested in pursuing the property."

The mayor placed calls to Honeywell last week – when it looked clearer that the merger would fail – but calls have not been returned, he said.

"We’re trying again today," Cleary added. "They told me by July 7 they should know."

Officials said last year that the Honeywell property was indirectly tied to Liebert Inc. expansion plans.

The city has been working on the industrial park plans for about a year and a half now, eying the south Ironton property at the former AlliedChemical site now owned by Honeywell.

In December, after receiving the approval of state grants, city and county officials said they wanted to move forward with plans to purchase and develop the property to provide room for a Liebert Inc. expansion.

The Ohio Department of Transportation’s garage sits directly behind Liebert, which LEDC wants to acquire for an expansion that will provide 200 more jobs, the Lawrence Economic Development Corporation said then.

Officials, including the Lawrence County Commission, had expected to start on the project early this year.

The resulting industrial park would also provide land for other Ironton companies wanting to expand, as well as land to market for future companies, city officials said.

Maintaining an industrial park within city limits would be a plus, Cleary said.

State of Ohio officials agreed, granting about $225,000 for the project and supporting Ironton’s plans to buy the Honeywell property.

In late May, Gov. Bob Taft wrote Honeywell CEO Michael Bonsignore, asking the company provide assistance to close the real estate deal.

State funds were provided after city officials successfully negotiated a purchase price, but efforts to close have been delayed, Taft wrote.

"It is vital to the future of Ironton’s economic development strategy for this property to be acquired," Taft wrote. "I would appreciate any assistance you could provide to bring this acquisition process to a close."

Bonsignore responded June 4 by detailing the GE merger process and the decision to suspend company transactions.

"We are aware of the situation in Ironton, and the importance of our property in supporting the city’s efforts to expand its employment base," Bonsignore wrote. "At this time, though, it appears the most effective step we can take is to facilitate communication between your office, local officials and the appropriate staff within GE, once the acquisition process is completed."

Bonsignore did not indicate a date that Ironton’s property acquisition would be revisited by the company, nor did he indicate when the GE merger would be complete.

After Friday’s new merger offer by Honeywell, Bonsignore told reporters that the proposal satisfies all of the competition concerns and serves the best interests of all stakeholders.

But GE chairman and chief executive Jack Welch said Honeywell’s proposal ”makes no sense” for GE shareholders. What the Europeans are seeking ”cuts the heart out of the strategic rationale of our deal,” he said.

GE spokeswoman Louise Binns said GE has no plans to make further proposals to the Europeans before today, when the European Commission will probably vote on the deal. She would not declare the deal dead, but said: ”We’re not optimistic of approval.”

The deal won conditional antitrust clearance in the United States in May but has encountered resistance in Europe. Some in Congress have accused the 15-nation European Union of protectionism and have threatened retaliation.

On Friday, Honeywell offered to accept a lower amount of stock from GE, effectively reducing the value of the deal from $41.7 billion to $39.5 billion.

In return, Honeywell proposed that GE make $2.1 billion of divestitures and spin off part of the company’s aircraft-financing and leasing unit. GE had been proposing about half as much in divestitures.

 

To read a story previously published about this issue, click HERE.