As part of the deal, Honeywell shareowners will receive 1.055 shares of GE stock in exchange for one share of Honeywell. GE will also receive an option for 19.9% of Honeywell's outstanding stock.
John F. Welch, Chairman and CEO of GE, and Michael R. Bonsignore, Chairman and CEO of Honeywell made the announcement this week. Bonsignore will become a member of the GE Board of Directors, and two additional Honeywell directors will join him on the GE board.
The deal is expected to close in early 2001. Welch will stay on as Chairman and CEO of GE until the end of 2001, through the transition.
If approved, the deal would create one of the world's largest industrial companies, with manufacturing operations dedicated to plastics, chemicals and aerospace products.
The deal comes less than a year after the former AlliedSignal bought Honeywell and assumed its name. Last month, Honeywell sold its friction materials business, which supplies heavy-duty trucks and trailers along with other transportation industries, to Questor Partners Fund II L.P.