General Electrics Proposed Acquisition of Honeywell Harvard Case Solution & Analysis

On March 1, 2001, Jessica Gallinelli, managing director of Bancroft Capital Management, heard some strange and troubling news on the proposed rate for the General Electric Company (GE) for Honeywell International, Inc Despite recent public assurances about the transaction with GE Chairman and Chief Executive Officer (CEO), John F. "Jack" Welch Jr., the competition authority of the European Commission Regulation (EC) announced that it has initiated a review of the proposed merger. Gallinelli, whose fund owned a large stake in Honeywell, consider this important event, and asks whether Bancroft should change their investment. Immediately, Gallinelli instructed her associates to provide background material on the merger, estimate the probability of the merger will be approved by antitrust regulators in the U.S. and Europe, and assessment tests to help in the evaluation of investment Gallinelli Bancroft at Honeywell. It must decide soon whether to hold or sell 10 million shares of its stock Honeywell and a short position of 10 million shares of GE. As a risk arbitrageur, she thought prices would quickly respond to a statement the European Commission. She remembered the trust of Jack Welch, five months earlier, it was a "clean deal you've ever seen," and she asked if this was still the case.
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by Robert F. Bruner, Solomon Eskinazi, Sean Carr Source: Darden School of Business 23 pages. Publication Date: December 9, 2005. Prod. #: UV1390-PDF-ENG

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