The breakup of General Electric Co.'s planned acquisition of Honeywell International Inc. has raised key questions regarding the plastics operations of the two massive conglomerates.
Namely, will GE Plastics still look to add nylon to its plastics portfolio? And will Honeywell hold on to its plastic resin and film operations?
The European Commission formally rejected the $42 billion deal July 3, citing concerns that a combined GE-Honeywell would reduce competition severely in the aerospace industry and result in higher prices for airlines.
Nylon is practically the only engineering resin that Pittsfield, Mass.-based GE Plastics doesn't produce. Adding Honeywell's nylon unit would have given GE a nylon resin business that trails only DuPont in the North American market.
GE Plastics spokesman Jay Pomeroy said the firm still wants to add nylon to its portfolio and would be more likely to do so through an acquisition rather than a green-field project.
``The Honeywell nylon business would have been a nice fit for us,'' Pomeroy said by telephone July 5. ``Unfortunately, that's gone by the wayside, but we're going to continue to evaluate different opportunities in nylon.''
As for Honeywell, industry watchers long have speculated that the Morristown, N.J.-based firm would jettison its resin and film businesses as it focused more on aerospace. But all speculation may be just that, since Chairman and Chief Executive Officer Larry Bossidy listed performance polymers as a core business in a July 5 meeting with employees, Honeywell spokes- woman Kathy Dennis said.
Bossidy replaced Michael Bonsignore shortly after the EC rejected the merger.
Bossidy, 66, had served as chairman and CEO of AlliedSignal Inc. from 1991-99 and became chairman of Honeywell following the merger of the two companies. AlliedSignal adopted the Honeywell name following the deal.
``We're very focused on remaining in the plastics industry,'' said Dennis, adding that the firm introduced new film-grade nylon resins earlier this year and plans to begin production of nanocomposite-based nylon resins before the year is out.
The acquisition would have created a $500 million plastics processing behemoth by combining GE Plastics' Structured Products sheet business with Honeywell's film operations. The combined firm also would have held at least 8 percent of the U.S. plastics compounding market by meshing Honeywell's nylon compounding capacity with GE Plastics' blends and alloys operations.