Industrials
Why Staples and GE May Matter in a Merger of Honeywell and United Tech
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Big mergers make for big business. The larger the deal, the larger the opportunity. That also is followed by the highest stakes regarding regulatory concerns. So what are investors and consumers expected to think when they hear that United Technologies Corp. (NYSE: UTX) and Honeywell International Inc. (NYSE: HON) may be in (or held) merger talks?
Talks were reportedly initiated by United Tech, according to CNBC’s David Faber. While there are other operations to consider, the reality is that this would make for yet another aerospace giant that could come with the creation of a company with over $90 billion in annual sales.
24/7 Wall St. has no interest in simply carrying out a rebroadcast of this market rumor. What matters here is the regulatory angle. When you ask whether regulators would approve such a deal, there is the past consideration of General Electric Co. (NYSE: GE) wanting to acquire Honeywell. This was not blocked by U.S. regulators, but the GE-Honeywell merger was blocked by European Union regulatory powers.
Then there is the case of Staples Inc. (NASDAQ: SPLS). This $6 billion company by market cap is trying to win approval for the acquisition of Office Depot Inc. (NASDAQ: ODP). U.S. regulators are currently against this merger, and the value of Office Depot, even after its acquisition of OfficeMax, is just $2.9 billion. European regulators have granted what appears to be approval, but Staples has agreed to sell off certain operations. Staples also has offered concessions here in the United States. This deal remains under legal challenge by the U.S. regulators.
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