UTX United Technologies Corporation

By Ted Mann 

Honeywell International Inc. kept the pressure on its rival United Technologies Corp. to engage in merger discussions, saying there are no major regulatory obstacles to a combination of the two industrial conglomerates.

"We do not see the regulatory process as a material obstacle to a transaction," Honeywell said Tuesday. The company said its proposed deal would create $3.5 billion in savings and benefit customers, but also said it wouldn't overpay to get its rival to the negotiating table.

"We would not and will not pursue a transaction that is not in the best interest of our shareowners," Honeywell said.

The statement came hours after United Technologies Chief Executive Gregory Hayes said there is "no path forward" for a merger of the two companies, given the antitrust scrutiny a deal would face. "It ain't going to happen," Mr. Hayes said in an appearance on CNBC. "There is just no way to get it done."

Honeywell made an offer last week of $108 a share to combine the two companies, including $42 a share in cash. United Technologies has rebuffed the offer.

The discussions began last spring when Mr. Hayes first broached a deal with Honeywell CEO David Cote, he said, but United Technologies later became convinced after consulting with its attorneys that a deal couldn't survive antitrust scrutiny.

Mr. Hayes said a merger would be opposed by the companies' most important aerospace customers, Boeing Inc. and Airbus Group SE. "It would be irresponsible for us to pursue the merger," he said, adding that it was unlikely to succeed "in this regulatory environment."

Shares of both companies fell slightly in Tuesday's session. United Technologies slipped 82 cents to $91.55 while Honeywell lost 93 cents to $103.64.

Mr. Hayes raised the specter of a past merger fiasco affecting both companies: the failed effort by United Technologies to acquire Honeywell in 2000. In that deal, General Electric Co. swooped in to beat out United Technologies and strike a deal for Honeywell, only to see the transaction blocked by antitrust regulators in Europe.

"The last thing I want to do is decimate my company the way Honeywell was decimated after the failed merger with GE," he said.

Write to Ted Mann at ted.mann@wsj.com

(END) Dow Jones Newswires

February 23, 2016 17:09 ET (22:09 GMT)

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