GE says EU demands to get merger accepted are ``extraordinary''

<br>BRUSSELS, Belgium (AP) _ General Electric Co. CEO Jack Welch said the concessions his company and Honeywell International were willing to make to get European Union approval for their merger fell far

Thursday, June 14th 2001, 12:00 am

By: News On 6

BRUSSELS, Belgium (AP) _ General Electric Co. CEO Jack Welch said the concessions his company and Honeywell International were willing to make to get European Union approval for their merger fell far short of demands, making it unlikely the $41 billion merger will get the backing of the 15-nation bloc.

Welch said in a statement Thursday that his company ``wanted to complete the transaction but we have always said there is a point at which we wouldn't do the deal.''

``The Commission's extraordinary demands are far beyond that point.''

The two companies submitted to the EU's antitrust office a final package of concessions they were willing to make, including $2.2 billion divestitures in Honeywell's Aerospace business.

But the statement said ``the proposed divestitures are far short of the European Commission's demands which seek billions more than the proposed GE divestitures.''

Welch and EU antitrust Commissioner Mario Monti had a telephone conversation early Thursday to try to satisfy EU objections to the deal. The last-minute talks came after Welch met twice with Monti on Wednesday.

The deadline for GE to offer concessions is midnight Thursday in Brussels. A decision is due July 12.

Before the second meeting broke, an EU source said that the ``atmosphere is still good'' and both sides ``are working toward a solution.''

The news release from GE shed a different light.

Monti's office has cited concerns about the deal's potential to reduce competition in areas such as regional-jet engines, where GE and Honeywell dominate the market, as well as the impact on competition of ``bundling'' GE jet engines with Honeywell electronics and financing from GE Capital Aviation Services (GECAS).

GECAS is also the world's second-biggest buyer of airplanes, which it then leases to airlines and others.

GE said in Thursday that it offered to set up GECAS as a separate ``ring-fenced'' entity ``to deal at arms length with Honeywell.

Honeywell shares fell $4.22 to $38.04 in morning trading on the New York Stock Exchange, where GE shares were up 54 cents to $48.39.