The new Honeywell began trading on 2 December following European Commission (EC) approval for the merger of avionics giants Honeywell and AlliedSignal.

EC clearance, which follows US Department of Justice (DoJ) approval, came after the partners agreed to certain undertakings to allay EC concerns over the merger. The EC's detailed investigation of the merger raised "serious doubts about the creation or strengthening of a dominant position" in particular markets.

The undertakings, similar to those required by the DoJ, include selling Honeywell's airborne collision avoidance system activity and the civil helicopter radar business of AlliedSignal.

The EC was concerned about the partners' "dominant position" in the terrain awareness warning systems (TAWS) market. AlliedSignal has a monopoly position with its Enhanced Ground Positioning Warning System and the EC feared that the merger would hinder any new market entrant.

Honeywell has agreed to provide other companies with open interface standards so that new TAWS suppliers can have their products installed on aircraft equipped with other Honeywell avionics.

The partners have also agreed to supply third parties with TAWS technology and interface data to allow them to participate in future next generation integrated hazard surveillance systems developments.

Furthermore, Honeywell has agreed not to sell its avionics and non-avionics equipment as a package. The EC felt that the ability to offer combined products would have given it "substantial commercial advantages".

With approval for the merger, the partners have embarked on an accelerated timetable to form the combined $24 billion company, says Lawrence Bossidy, chairman of the new Honeywell. Integration activities are expected to be completed by mid-2000, with significant revenue synergies expected to be achieved by 2002.

Cost savings for the first year are estimated at $250 million, while Honeywell has raised its cost-savings estimate for 2002 from $500 million to $750 million. The company is expecting a charge of $850-950 million related to the merger integration and restructuring actions.

Source: Flight International