Honeywell has offered to reduce the purchase price it sought from General Electric to compensate its suitor for the demands of European antitrust regulators and close the deal.
Honeywell said it would reduce the stock exchange ratio on the deal to 1.01 shares of GE for each Honeywell share - down from the previously ratio of 1.055 shares of GE.
At yesterday’s closing price for GE of $48.87, that would cut the value of the deal to $39.9 billion from $41.7 billion.
The reduction would compensate GE for the divestiture of a 19.9 per cent stake in its aircraft leasing arm, GE Capital Aviation Services or GECAS, Honeywell said.
Honeywell, in a letter sent to GE, said it saw no choice but to offer the European Commission the divestitures offered two weeks ago, which generate $2.2 billion in revenues.
On Wednesday, GE had altered its proposal, offering to sell a stake in GECAS in exchange for a substantial reduction in the amount of divestitures.
The Commission rejected GE's last-minute offer, citing in part the company's delay in proposing such a deal. Commissioner Mr Mario Monti said there was not sufficient time to adequately consider the new divestiture package, Honeywell said.
"Therefore, a more complete alternative is the only possible effective solution that will satisfy the commission," said Honeywell chairman and chief executive Mr Michael Bonsignore in a letter to GEchairman Mr Jack Welch.
"Accordingly, in addition to the strengthened partial divestiture of GECAS, I see no choice now but to return to the $2.2 billion of divestitures in the June 14 offering, which both of us submitted to the Commission," Mr Bonsignore said.